The big news in today’s business world is Sun’s setting on the proposed IBM deal in favor of taking the Oracle offer instead. Both Oracle and Sun Microsystems announced today that they’ve reached an agreement wherein Oracle will acquire Sun common stock in a $7.4 billion deal. This will move about $5.6 billion of Sun’s net worth into Oracle’s portfolio.
Oracle has high hopes for the deal, expecting to reach $1.5-$2 billion in profit per year for the next two projected years from Sun operations alone (Sun has lost 11% of its revenue year-over-year). This would make Sun into the most profitable acquisition Oracle has made yet. As Tech Crunch points out, this is a big step towards making Oracle more of a soup-to-nuts provider of enterprise technology.
Sun’s board of directors unanimously agreed to the buyout and the deal is expected to go through this summer. The board had serious reservations about IBM’s offer made last month, it’s reported, which explains why that merger didn’t happen.
Oracle’s largest plans are for Sun’s Java programming language, of course. Oracle themselves have stated that Java is a critical part of their Fusion Middleware offerings and the company plans to push them into as much prominence as their largest business: database systems (Exadata).
It’s not likely that Oracle will promote Sun’s hardware business too heavily, as the company has stated in the past that they “aren’t in the hardware business.” It’s also unlikely that Sun’s server technologies will be dumped altogether, either, being the behemoth in the market that they are.
The choice of buyout isn’t overly surprisingly, at any rate, as the two companies have been close partners for over two decades. Ad to that the fact that Sun’s Solaris OS is the leading platform for Oracle’s database and that their Fusion Middleware line is built on Sun’s Java, and the acquisition gains huge implications. Obviously, Oracle will become even more of a powerhouse thanks to this deal.
This merger is likely the single most important change in the technology world in the past decade and will have far-reaching implications for a very long time. It’s probable that the next two or three years will see huge shakeups in the tech world as companies adjust to this merger and the troubled economic climate we have today.