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UPDATE 3-Oracle says NY Post report on Sun is false

 * NY Post said Oracle prepared to "quarantine" MySQL
 * Oracle spokeswoman said report "completely untrue"
 * Oracle has replied to EU's statement of objections
 * Sun shares retreat after rising 6 pct on report
 (Adds source comment on Oracle responding to EU objections)
 By Jim Finkle
 BOSTON, Dec 4 (Reuters) - Oracle Corp ORCL.O denied a
newspaper report that Chief Executive Larry Ellison is backing
down in a dispute with the European Union over the terms of the
software company's $7 billion acquisition of Sun Microsystems
Inc JAVA.O.
 The New York Post reported on Friday that Oracle was
prepared to address the EU's concerns about the future of Sun's
MySQL database unit by offering to "quarantine" the division,
running it as a separate business. The article cited two unnamed
sources.
 "The New York Post article is completely untrue," said
Deborah Hellinger, a spokeswoman for Oracle, the world's No. 2
business software maker. She declined to elaborate on the status
of Oracle's efforts to win EU approval of its $7 billion
acquisition of Sun.
 Shares of Sun had risen as much as 6 percent in early Nasdaq
trading following the New York Post report. The stock retreated
to $8.38 by late morning, still up about 2 percent.
 The European Commission, the competition regulator in the
27-country EU, has held up the deal for months, saying it is
concerned the acquisition of Sun's MySQL database by Oracle could
hurt competition in the $19 billion a year database market.
 Oracle replied to the Commission's so-called statement of
objections on Friday, the last day for it to do so, a person
close to the company told Reuters. The regulator had set out in
the document its concerns on the competitive impact of the deal.
 The person said the deadline for the world's biggest
database software maker to submit remedies to address such
concerns was Dec. 14.
 The New York Post reported that Ellison had proposed to EU
regulators that he create a "firewall" between MySQL and the rest
of Oracle. He also floated the idea of creating a separate board
for MySQL, according to the newspaper.
 That report cited its sources as saying there had been no
talk of spinning off MySQL into a separate, public company.
 DELAYS IN EU
 The Oracle-Sun deal, which was signed in April, would help
transform Oracle from a software maker into an integrated
technology company that sells servers and storage equipment
alongside its computer programs.
 European authorities detailed their concerns last month in a
document known as a Statement of Objections. The commission has
until Jan. 27 to clear or reject the acquisition. It will hold a
hearing on the matter on Dec. 10 in Brussels, according to
people familiar with its handling of the case.
 Analysts said it was unclear whether Oracle would need to
make concessions to win EU clearance of the Sun deal.
 Jefferies & Co analyst Ross MacMillan said that it was
difficult to gauge whether Oracle was open to a compromise with
the EU that might restrict the way it runs MySQL.
 "I don't know what to believe," MacMillan said.
 MySQL is one of several assets that Oracle will gain with
Sun, but it is the only one that antitrust regulators have
singled out for scrutiny. Sun is the world's No. 4 maker of
computer servers, owns the widely used Java computer language
and is also a major supplier of data storage equipment.
 Oracle has fought to keep MySQL, rather than divest it in a
bid to quickly clear EU approval, because it can help the
company expand into new markets and improve its competitive edge
against rival Microsoft Corp MSFT.O.
 Microsoft's SQL Server database is primarily used by small
to mid-sized businesses, which is also MySQL's core market.
 Delays in winning EU approval have resulted in what Oracle
CEO Larry Ellison has said are hundreds of millions of dollars
in losses for Sun, which is losing business to rivals IBM
IBM.N and Hewlett-Packard Co HPQ.N.
 (Additional reporting by Foo Yun Chee in Brussels; Editing by
Phil Berlowitz, Derek Caney)
 ((jim.finkle@thomsonreuters.com; + 1 617 856 4344; Reuters
Messaging: jim.finkle.reuters.com@reuters.net))
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