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.

---

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.

---