NEW YORK (Reuters) - Business software maker Oracle Corp on Monday offered to pay more than $7 billion to acquire Sun Microsystems Inc in a surprise offer that came two weeks after the collapse of takeover talks between Sun and International Business Machines Corp.
The Oracle offer of $9.50 a share in cash was at a 42 percent premium to the high-end server maker’s closing stock price on Friday.
The following is reaction from industry analysts and investors:
SHANNON CROSS, CROSS RESEARCH, SHORT HILLS, NEW JERSEY
“It’s a very interesting acquisition in that it gives Oracle a very strong operating system. It gets hardware, which should be interesting to see since Oracle doesn’t make things. It’s going to give them access to customers who weren’t using the Oracle database.”
“If you think of it as a software acquisition, it is a far more interesting acquisition than IBM buying Sun, which had significant overlap.”
“It moves Oracle more into the competition with HP and IBM and Microsoft. it makes them a player in the space (the enterprise data center).”
“Sun is going to have to go into significant restructuring.”
“From a derivative standpoint its a negative for Red Hat, since there had been speculation that Oracle might buy Red Hat at some point in time. There are a lot of smaller software companies that Oracle had been rumored to buy. Whether or not this stops it, I’m not sure, but it certainly probably slows that.”
“Sun has been shopped around for a long time, and my guess is this is not the first time Oracle has looked at Sun. I’m sure they have done a lot of due diligence on Sun.”
ROBERT JAKOBSEN, JYSKE, COPENHAGEN, DENMARK
“I’m initially a little bit surprised. It could make sense.”
“The deal would strengthen Oracle’s position against IBM. Oracle has done a good job on acquisitions it has done earlier.”
“It makes sense also historically, Oracle has been more successful commercializing software than Sun.”
DAVE ROVELLI, MANAGING DIRECTOR, US EQUITY TRADING CANACCORD ADAMS, NEW YORK
“Right now the markets are more focused on what happened with Bank of America, but obviously its good to have mergers. Its show there are companies out there looking for a good investment.
“The market is not going to trade up off this. Its more concerned with the Bank of America earnings and Goldman Sachs reiterated its sell rating on Citi with $1.50 price target.
“It’s definitely a positive but tech is up so much, it’s the number one sector besides financial in this rally. The semiconductor index from November 21 to this week is up 58 percent of its lows. I don’t think you should look at it as a negative if it doesn’t give it a lift, futures are down (S&P 500) 12 points which is a pretty big move. Put it this way if the market’s down at the open, if tech’s down, it wont be as down as much as it would have been.”
Reporting by Ed Krudy and Franklin Paul in New York and Tarmo Virki in Helsinki
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