Welcome!

Recurring Revenue Authors: Zakia Bouachraoui, Elizabeth White, Pat Romanski, Carmen Gonzalez, Yeshim Deniz

Related Topics: IBM Cloud, Java IoT, Linux Containers, Recurring Revenue, Log Management, Server Monitoring

IBM Cloud: Article

IBM Reportedly Pulls Offer for Sun

No news outlet could say whether the rift is tactical or whether it will be mended

Sun's board rejected a formal IBM offer for the company Saturday as too low, according to the Wall Street Journal.

Apparently the price IBM offered was $9.40 a share or less, down from a reported $9.55 late last week.

IBM pulled its roughly $7 billion offer off the table on Sunday, according to the Journal, the AP and the New York Times, after Sun terminated IBM's exclusive bargaining rights.



No news outlet could say whether the rift is tactical or whether it will be mended.

The AP claimed it heard the two sides were still meeting Sunday. The Journal then waded in and said the companies were "still in touch by phone" and that the situation was "fluid."

Unless the talks get back on track, Sun's stock price, bid up to $8.49 Friday in anticipation of a deal Monday, may crash.

Sun, which shopped itself around for months, according to Intel CEO Paul Otellini, is believed to be pretty much in a corner with no other acquirer likely, particularly at such a premium, roughly double its stock price when news of the talks leaked out on March 19.

The price originally heard was $10-$11 a share but that did not appear to survive IBM's due diligence.


As of last week Sun was reportedly willing to accept a cut provided IBM committed to completing the deal despite what may be long and intense antitrust scrutiny particularly around their Unix server and tape storage interests. IBM+Sun represent 65% of all Unix boxes and a monopoly in tape.

The Journal said last Thursday that "Sun's board wants to limit IBM's ability to exit the deal," which could face regulator strings.

On Sunday, the paper said Sun felt IBM had "too much leeway to walk away from the deal." The Times said IBM felt the guarantees Sun wanted were "onerous."

Although it's assumed they got some sort of informal ruling from the regulators early on, the Journal suggested Sun wanted an undertaking from IBM to close the deal even if regulators ultimately demanded divestiture.

The Times said that IBM lowered its price because the payoffs in the "change of control" contracts with Sun executives, senior engineers and managers were "higher and extended more broadly across the company than it had anticipated." That ought to raise stockholders' hackles.

Most industry observers are amazed that IBM was willing to pay even $9.55 for Sun. Six dollars would seem more appropriate to them.

It would be IBM's largest acquisition ever.

It is unclear what else IBM might buy instead of Sun since CEO Sam Palmisano has indicated he's interested in acquisitions.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

Comments (0)

Share your thoughts on this story.

Add your comment
You must be signed in to add a comment. Sign-in | Register

In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.


IoT & Smart Cities Stories
The term "digital transformation" (DX) is being used by everyone for just about any company initiative that involves technology, the web, ecommerce, software, or even customer experience. While the term has certainly turned into a buzzword with a lot of hype, the transition to a more connected, digital world is real and comes with real challenges. In his opening keynote, Four Essentials To Become DX Hero Status Now, Jonathan Hoppe, Co-Founder and CTO of Total Uptime Technologies, shared that ...
Every organization is facing their own Digital Transformation as they attempt to stay ahead of the competition, or worse, just keep up. Each new opportunity, whether embracing machine learning, IoT, or a cloud migration, seems to bring new development, deployment, and management models. The results are more diverse and federated computing models than any time in our history.
At CloudEXPO Silicon Valley, June 24-26, 2019, Digital Transformation (DX) is a major focus with expanded DevOpsSUMMIT and FinTechEXPO programs within the DXWorldEXPO agenda. Successful transformation requires a laser focus on being data-driven and on using all the tools available that enable transformation if they plan to survive over the long term. A total of 88% of Fortune 500 companies from a generation ago are now out of business. Only 12% still survive. Similar percentages are found throug...
At CloudEXPO Silicon Valley, June 24-26, 2019, Digital Transformation (DX) is a major focus with expanded DevOpsSUMMIT and FinTechEXPO programs within the DXWorldEXPO agenda. Successful transformation requires a laser focus on being data-driven and on using all the tools available that enable transformation if they plan to survive over the long term. A total of 88% of Fortune 500 companies from a generation ago are now out of business. Only 12% still survive. Similar percentages are found throug...
Dion Hinchcliffe is an internationally recognized digital expert, bestselling book author, frequent keynote speaker, analyst, futurist, and transformation expert based in Washington, DC. He is currently Chief Strategy Officer at the industry-leading digital strategy and online community solutions firm, 7Summits.
Digital Transformation is much more than a buzzword. The radical shift to digital mechanisms for almost every process is evident across all industries and verticals. This is often especially true in financial services, where the legacy environment is many times unable to keep up with the rapidly shifting demands of the consumer. The constant pressure to provide complete, omnichannel delivery of customer-facing solutions to meet both regulatory and customer demands is putting enormous pressure on...
IoT is rapidly becoming mainstream as more and more investments are made into the platforms and technology. As this movement continues to expand and gain momentum it creates a massive wall of noise that can be difficult to sift through. Unfortunately, this inevitably makes IoT less approachable for people to get started with and can hamper efforts to integrate this key technology into your own portfolio. There are so many connected products already in place today with many hundreds more on the h...
The standardization of container runtimes and images has sparked the creation of an almost overwhelming number of new open source projects that build on and otherwise work with these specifications. Of course, there's Kubernetes, which orchestrates and manages collections of containers. It was one of the first and best-known examples of projects that make containers truly useful for production use. However, more recently, the container ecosystem has truly exploded. A service mesh like Istio addr...
Digital Transformation: Preparing Cloud & IoT Security for the Age of Artificial Intelligence. As automation and artificial intelligence (AI) power solution development and delivery, many businesses need to build backend cloud capabilities. Well-poised organizations, marketing smart devices with AI and BlockChain capabilities prepare to refine compliance and regulatory capabilities in 2018. Volumes of health, financial, technical and privacy data, along with tightening compliance requirements by...
Charles Araujo is an industry analyst, internationally recognized authority on the Digital Enterprise and author of The Quantum Age of IT: Why Everything You Know About IT is About to Change. As Principal Analyst with Intellyx, he writes, speaks and advises organizations on how to navigate through this time of disruption. He is also the founder of The Institute for Digital Transformation and a sought after keynote speaker. He has been a regular contributor to both InformationWeek and CIO Insight...