Oracle Corp. struck a surprise deal to buy Sun Microsystems Inc. for $7.38 billion, elbowing aside International Business Machines Corp. in the latest sign that a few well-heeled giants are exploiting the recession to snap up weaker players.

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Wall Street Journal , APRIL 21, 2009

Oracle Snatches Sun, Foiling IBM

Oracle Corp. struck a surprise deal to buy Sun Microsystems Inc. for $7.38 billion, elbowing aside International Business Machines Corp. in the latest sign that a few well-heeled giants are exploiting the recession to snap up weaker players.

Oracle, which has spent more than $30 billion buying software rivals in recent years, swung into action Thursday after talks between IBM and Sun had stalled, people familiar with the matter said.

IBM still held out hope over the weekend that Sun would accept a bid from the big computer maker, these people said, but Sun's board voted in favor of Oracle's offer, which was viewed as less likely to face an antitrust challenge since there was little business overlap.

IBM is highly unlikely to re-enter the bidding for Sun, said people familiar with the matter.

After factoring in Sun's cash and debt, the companies valued Oracle's offer at about $5.6 billion. Sun shareholders will get $9.50 a share in cash. Sun's stock surged 37% on the news Monday to $9.15.

Sun, whose server computers have long been sold along with Oracle's database software, was widely believed to need a bigger partner to compete with giants such as IBM, Hewlett-Packard Co. and Dell Inc. Sun has suffered from erratic profitability and revenue problems since a boom phase ended with the collapse of the dot-com bubble.

Oracle has emerged as one of the most powerful players on the tech landscape, buying rivals to assemble a long list of programs used by companies.

The deal gives Oracle control over important Sun software -- notably the popular programming technology called Java, which is used to build software for Web sites and cellphones. Oracle Chief Executive Larry Ellison described Java as "the single most important software asset we have ever acquired."

Some analysts said they were stunned by Mr. Ellison's move, predicting that Oracle may eventually choose to divest Sun's hardware business. But Safra Catz, one of two Oracle presidents, said Oracle intends to make Sun's hardware operations a profitable business unit.

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Nobody knows the fate of MYSQL. Oracle [b]MIGHT [/b]kill dt product to promote its own databse product.

You can check out these articles on BusinessWeek related the purchase.

Oracle's Sun Deal: A Closer Look http://www.businessweek.com/technology/content/apr2009/tc20090422_467791.htm?chan=rss_topStories_ssi_5

Is the Sun/Oracle Deal Good for MySQL Customers? http://www.businessweek.com/technology/technology_at_work/archives/2009/04/is_the_sunoracl.html

Excerpts here:
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Will MySQL stay as compelling?
Sun claimed more than 11 million users of its MySQL database, which it bought for $1 billion in 2008. Users include Internet powerhouses Google (GOOG) and Facebook, which favor the software's facility with Web applications. Taking ownership of the open-source software could give Oracle an entrée to Web 2.0 companies.

MySQL also could bolster Oracle's ties to the software developer community, helping it steal programming thunder from Microsoft's SQL Server. "Microsoft has always understood how to deal with developers and has good relationships with them," says one industry executive close to Sun. "Oracle doesn't have the same reach into the most innovative developers in the world. With MySQL, they get there."

Unfortunately for Oracle, most of MySQL's users don't pay for the software, opting for a free, unsupported version of it. Sun booked just $208 million in MySQL sales in fiscal 2008, vs. Oracle's $4.8 billion in expected database bookings for the fiscal year that ends in May. And Oracle's flagship database will pull along an additional $7.6 billion in support revenue. So MySQL could be more important strategically than monetarily to Oracle. "It was a huge source of pain at the low end of the market that they now don't have to worry about," says Citigroup's Thill.