The Oracle Corporation and Sun Microsystems announced yesterday, April 20,2009, that the two groups have arranged a confirmed agreement in which Oracle will purchase the common stock of Sun Microsystems for $9.50 in cash per share. This transaction between the two companies has an estimated value of $7.4 billion which $5.6 billion net of the debt and cash of Sun.
Safra Catz, President of Sun Microsystems, stated, “We expect this acquisition to be accreative to Oracle’s earnings by at least 15 cents on a non-GAAP basis in the first full year of after closing. We estimate that the acquired business will contribute over $1.5 billion to Oracle’s non-GAAP operating profit in the first year, increasing to $2 billion in the second year. This would make the Sun acquisition more profitable per share contribution in the first year than we had planned for the acquisitions of BEA, PeopleSoft, and Sieble combined.
“The acquisition of Sun transforms the IT industry, combining best-in-class enterprise software and mission-critical computing systems. Oracle will be the only company that can engineer an integrated system – applications to disk – where all the pieces fit and work together so customers do not have to do it themselves. Our customers benefit as their systems integration costs go down while system performance, reliability, and security go up.” said CEO of Oracle Larry Ellison.
By Oracle owning two key software assets from Sun – Java and Solaris – substantial and strategic customer advantages arise for the long term. The Sun Solaris Operating System is Oracle Database leading platform. By Oracle’s acquisition of Sun the company can optimize the Oracle Database some of Solaris’ unique and high-end features.
Java is most well-known brands in the computer industry and one of the most widely deployed technologies. Java is, perhaps, the most important piece of software they have ever bought. The fastest growing business of Oracle, Oracle Fusion Middleware, is built entirely on the software and language of Sun’s Java. With it under Oracle control, the company can now ensure innovation and investment in Java technology will continue for the benefit of customers and the Java community as a whole.
Sun Chairman Scott McNealy states that, “Oracle and Sun have long been industry pioneers and close partners for more than 20 years. This combination is a natural evolution of our relationship and will be an industry-defining event.”
“This is a fantastic day for Sun’s customers, developers, partners, and employees across the globe, joining forces with the global leader in enterprise software to drive innovation and value across every aspect of the technology marketplace.” stated CEO of Sun Jonathan Schwartz. “From the java platform touching nearly every business system on earth, powering billions of consumers on mobile handsets and consumer electronics, to the convergence of storage, networking, and computing driven by the Solaris operating system and Sun’s SPARC and x64 systems. Together with Oracle, we’ll drive the innovation pipeline to create compelling value to our customer base and the marketplace.”
Oracle President Charles Phillips stated, “Sun is a pioneer in enterprise computing, and this combination recognizes the innovation and customer success the company has achieved. Our largest customers have have been asking us to step up to a broader role to reduce complexity, risk, and cost by delivering a highly optimized stack based on standards. This transaction will preserve and enhance investments made by our customers, while we continue to work with our partners to provide customers with choice.”
Sun Microsystems’ Board of Directors unanimously approved the transaction between themselves and Oracle. The deal is said to be closed this summer but is subject to approval from stock holders, certain regulatory approvals, customary closing conditions.
