IBM Looking Forward to Acquire Sun Microsystems

IBM Interested in Taking Over Sun Microsystems

by Anton Shilov
03/18/2009 | 11:08 AM

IBM reportedly intends to acquire server manufacturer and Internet infrastructure specialist Sun Microsystems. The move will allow IBM to offer even broader amount of services to its clients and also strengthen IBM’s positions on the market of servers and storage.


A news-report from the Wall Street Journal cited a person with knowledge of the matter that IBM proposed Sun about $6.5 billion in cash, whereas another source told the New York Times that the price was even higher $7 billion of dollars, a large sum even for IBM amid the global economic slowdown. While the deal is not closed and may never be, according to media reports Sun is interested in being acquired, as it approached a number of largest companies for this in the recent months.

Together, the two companies would control about 65% the market for server computers running the Unix operating system and 42% of the total server market, according to estimates by the New York Times. Besides, the merged company will have very strong positions in the battle against Hewlett Packard, which have been strengthening its portfolio in the recent years.

Industry analysts consider the potential merge as a part of a consolidation trend, as HP, IBM and Cisco Systems jostle for control of corporate data centers and compete to supply the high-end computers that power complex corporate transactions and networks, reports Reuters news-agency.

“They need to make sure that they have a suite of products, to be on the leading edge, so they have dominant share. My feeling is that the good players with good technology and products will eventually get taken out by the bigger guys who have the means to do it and understand that it's easier to buy them than to mimic them through internal development," said Zach Rosenstock, analyst at Wayne Hummer Wealth Management.

Neither IBM nor Sun commented on the news-story.