Computer database company Oracle is set to buy information technology giant Sun Microsystems for $US7.4 billion, after Sun’s negotiations with IBM failed.
The move appears to be part of Oracle’s push to start selling integrated hardware and software systems, similar to those offered by IBM, Apple and Hewlett-Packard.
“With the acquisition of Sun, Oracle is now able to make all of the pieces of the technology stack fit together and work well – storage, computers, operating systems, database software, middleware and applications,” Oracle’s billionaire chief executive Larry Ellison said in a conference call with Forbes magazine.
The company said in a statement that the acquired business should contribute $US1.5 billion to Oracle’s non-GAAP (generally accepted accounting principles) operating profit.
“This would make the Sun acquisition more profitable in per share contribution in the first year than we had planned for the acquisitions of BEA, PeopleSoft and Siebel combined,” the company said.
“Until the deal closes, each company will continue to operate independently, and it is business as usual. The acquisition combines best-in-class enterprise software and mission-critical computing systems.”
The deal would also give Oracle control over Java, one of the most popular and widely used programming languages in the computer industry. The software has been installed on hundreds of millions of computers and mobile devices, while a healthy developer community has developed around learning and improving the software.
The acquisition also comes at a good time for Sun Microsystems. The company has reportedly been trying to sell itself for months, with IBM, HP, Dell and Cisco all rumoured as possible buyers.
Sun has been struggling through the downturn as demand for its high-end server hardware has dropped, with the company reporting losses in three of the past four quarters.
Sun chairman, Scott McNealy, said the combination with Oracle was a “momentous day” in the technology sector.
“There is no question in my mind that this transaction redefines the industry.”
The acquisition remains subject to shareholder and regulatory approval.
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Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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