IBM-Sun talks may extend beyond next week: source

NEW YORK Thu Mar 26, 2009 7:14pm EDT

A Sun Microsystems sign is pictured at the company's headquarters in Santa Clara, California March 18, 2009. REUTERS/Robert Galbraith

A Sun Microsystems sign is pictured at the company's headquarters in Santa Clara, California March 18, 2009.

Credit: Reuters/Robert Galbraith

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NEW YORK (Reuters) - IBM's (IBM.N) talks to acquire Sun Microsystems Inc JAVA.O are continuing and may extend beyond next week, according to a person with knowledge of the matter.

IBM is still examining Sun's business as part of its due diligence process, said the source, who was not authorized to speak about the talks and therefore requested anonymity.

Neither IBM nor Sun has issued any statement to say they are in talks, although sources said last week that the two sides are negotiating a merger that would bolster IBM's high-end server and software business.

The Wall Street Journal reported on March 18 that IBM could pay as much as $8 billion for Sun, amounting to a 100 percent premium for the high-end server computer maker. If a deal is sealed, it would be IBM's largest acquisition.

The source said on Thursday that IBM's due diligence process, or examination of Sun's business, was necessary considering Sun's size and complexity.

An IBM spokesman declined to comment, and Sun was not immediately available.

Some analysts have said Sun would bolster IBM's position against rivals like Hewlett-Packard Co (HPQ.N) and Cisco Systems Inc (CSCO.O), both of which have been acquiring smaller, niche technology firms to broaden their product and service offerings.

Sun shares were up 1.5 percent at $7.97 in early afternoon trading, shedding some of their earlier gains to $8.23. IBM shares were up 0.7 percent at $98.64.

(Reporting by Ritsuko Ando; Editing by Lisa Von Ahn and Brian Moss)

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