Oracle to acquire Sun for $5.6 billion
Oracle Corporation said Monday it has entered into a definitive agreement to acquire Sun Microsystems in a cash deal valued at $5.6 billion, paving the way for the enterprise software maker to deliver the industry's first fully integrated suite of hardware and software systems for some of the world's largest data centers.
The total transaction, valued at approximately $7.4 billion or $9.50 per share net of Sun’s cash and debt, comes just weeks after Sun was reported to have turned down a bid of $9.40 per share from IBM, which subsequently withdrew its offer after Sun canceled its exclusive negotiating rights.
Oracle said it expects the acquisition to add at least 15 cents on a non-GAAP profit to its adjusted earnings in the first full year after the deal closes. It also estimates that Sun will contribute over $1.5 billion to its non-GAAP operating profit in the first year, increasing to over $2 billion in the second year.
"This would make the Sun acquisition more profitable in per share contribution in the first year than we had planned for the acquisitions of BEA, PeopleSoft and Siebel combined,” said Oracle President Safra Catz.
Oracle picks up two key Sun software assets -- Java and Solaris -- in the deal that will allow it to deliver a full suite of hardware and software systems unparalleled in the industry.
Oracle Fusion Middleware, the software maker's fastest growing business, is built on top of Sun’s Java language and software, meaning Oracle can now ensure continued innovation and investment in Java technology for the benefit of its customers. Meanwhile, the Solaris operating system is the leading platform for the Oracle database, Oracle’s largest business. With Solaris now part of its product portfolio, Oracle plans optimize the Oracle database for some of the operating system's unique, high-end features.
"Oracle will be the only company that can engineer an integrated system – applications to disk – where all the pieces fit and work together so customers do not have to do it themselves," said Oracle chief executive Larry Ellison. "Our customers benefit as their systems integration costs go down while system performance, reliability and security go up."
More specifically, Oracle will be free to more closely tie its software to Sun servers running Solaris, which power some of the most critical data centers in government and on Wall Street.
Sun's Board of Directors has unanimously approved the transaction. It is anticipated to close this summer, subject to Sun stockholder approval, certain regulatory approvals and customary closing conditions.
The total transaction, valued at approximately $7.4 billion or $9.50 per share net of Sun’s cash and debt, comes just weeks after Sun was reported to have turned down a bid of $9.40 per share from IBM, which subsequently withdrew its offer after Sun canceled its exclusive negotiating rights.
Oracle said it expects the acquisition to add at least 15 cents on a non-GAAP profit to its adjusted earnings in the first full year after the deal closes. It also estimates that Sun will contribute over $1.5 billion to its non-GAAP operating profit in the first year, increasing to over $2 billion in the second year.
"This would make the Sun acquisition more profitable in per share contribution in the first year than we had planned for the acquisitions of BEA, PeopleSoft and Siebel combined,” said Oracle President Safra Catz.
Oracle picks up two key Sun software assets -- Java and Solaris -- in the deal that will allow it to deliver a full suite of hardware and software systems unparalleled in the industry.
Oracle Fusion Middleware, the software maker's fastest growing business, is built on top of Sun’s Java language and software, meaning Oracle can now ensure continued innovation and investment in Java technology for the benefit of its customers. Meanwhile, the Solaris operating system is the leading platform for the Oracle database, Oracle’s largest business. With Solaris now part of its product portfolio, Oracle plans optimize the Oracle database for some of the operating system's unique, high-end features.
"Oracle will be the only company that can engineer an integrated system – applications to disk – where all the pieces fit and work together so customers do not have to do it themselves," said Oracle chief executive Larry Ellison. "Our customers benefit as their systems integration costs go down while system performance, reliability and security go up."
More specifically, Oracle will be free to more closely tie its software to Sun servers running Solaris, which power some of the most critical data centers in government and on Wall Street.
Sun's Board of Directors has unanimously approved the transaction. It is anticipated to close this summer, subject to Sun stockholder approval, certain regulatory approvals and customary closing conditions.
Comments
The implications alone of Oracle owning Java are immense. They can have a vertically integrated business model in many areas now, which has certainly worked well for Apple.
I just hope they keep developing VirtualBox and keep it free!
Although I'm not so sure about some of the comments made; IBM is also in a position to offer its customers completely integrated systems as well. They do make their own hardware and software as well.
I wonder what this means for the future of MySQL...
My guess is that MySQL will be a lot better off under Oracle as a low-end intro DB kind of like SleepyCat.
Yeah, are you saying that IBM doesn't offer integrated Hardware/Software solutions???
Assuming this question is directed at me...
No, I didn't say anything about IBM's solutions.
I said an Oracle/Sun combination is better for Oracle and Sun than an IBM/Sun combination would have been for IBM and Sun.
The article stated:
Oracle Fusion Middleware, the software maker's fastest growing business, is built on top of Sun?s Java language and software, meaning Oracle can now ensure continued innovation and investment in Java technology for the benefit of its customers. Meanwhile, the Solaris operating system is the leading platform for the Oracle database, Oracle?s largest business. With Solaris now part of its product portfolio, Oracle plans optimize the Oracle database for some of the operating system's unique, high-end features.
So, the acquisition of Java, Solaris, and other technologies will allow Oracle to have more vertically integrated solutions in the above mentioned and other areas. Indeed, Oracle will be a more formiddable competitor to IBM.
http://en.wikipedia.org/wiki/Vertical_integration
I think Oracle has a lot more to gain from acquiring Sun than IBM did. This is a better deal for Sun, as well, and there is a lot less potential for layoffs due to overlap in services/products.
The implications alone of Oracle owning Java are immense. They can have a vertically integrated business model in many areas now, which has certainly worked well for Apple.
I just hope they keep developing VirtualBox and keep it free!
Although Oracle/Sun may be trying to move to a more vertically integrated market, there
are some differences between their situation and Apple's. For one thing, Apple has used
this model at least since the introduction of the Mac, arguably before that. Selling hardware
is new for Oracle, so the Sun acquisition will have to be fully integrated into the company,
a considerable task. Also, Apple sells to consumers and Oracle/Sun sells to enterprises.
Consumers can change their minds instantly, while enterprises have a lot of inertia to
overcome in accepting new things. Finally, Apple makes a point of differentiating their
products from those of their competitors, through styling, industrial design, or innovative
features. Sun's products, mostly servers and workstations, are considered commodities
and will be much tougher to differentiate. Note that Sun has really struggled to make a
profit for several years. This merger is probably going to take quite some time to work
out, in my opinion.
Apparently Oracle has the most to lose if Sun goes under.
Although I'm not so sure about some of the comments made; IBM is also in a position to offer its customers completely integrated systems as well. They do make their own hardware and software as well.
I think this view is more to the point. Oracle needs Sun, and Oracle certainly does not
want to see Sun swallowed by IBM.
A very interesting a well written article but what exactly has it got to do with Apple?
Java is implemented in OS X
A very interesting a well written article but what exactly has it got to do with Apple?
Java, MySQL, D-Trace, ZFS...
A very interesting a well written article but what exactly has it got to do with Apple?
Is this a serious question?
Sun's influence on Apple.
MySQL
Java
DTrace
ZFS
Oracle makes iPhone apps and some developer tools
Both are Apple partners.
"The acquisition of Sun transforms the IT industry, combining best-in-class enterprise software and mission-critical computing systems," said Oracle CEO Larry Ellison. "Oracle will be the only company that can engineer an integrated system - applications to disk - where all the pieces fit and work together so customers do not have to do it themselves. Our customers benefit as their systems integration costs go down while system performance, reliability and security go up."
http://www.sun.com/third-party/global/oracle/index.jsp
So, the acquisition of Java, Solaris, and other technologies will allow Oracle to have more vertically integrated solutions in the above mentioned and other areas. Indeed, Oracle will be a more formiddable competitor to IBM.
Whatever Oracle is buying, it's not Java itself. It is, however, the core team of Java developers, assuming they don't walk. My guess is that a lot of them will, as soon as they can. Though in this economy that might not be very soon. Oracle's development culture is not a good fit with Sun's.
But I agree that this is a good move for Oracle. Oracle runs on Solaris in many key accounts, to the point where I don't think Solaris would even exist today if not for Oracle implementations. Oracle uses Java everywhere and will exert an even larger influence on its direction.
I'm wondering what will happen to Netbeans (Oracle has J Developer) as well as a lot of other stuff Sun contributed to open source. Ellison is less generous. To put it mildly.
IBM is the loser here. I don't quite know what they were thinking.
I don't see much significant impact to Apple, good or bad.
I agree Oracle makes more sense than IBM, but Java being the key asset?
Java is very relevant in the enterprise.
The Oracle database itself can be closely coupled with Java.
Reports of Java's death have been greatly exaggerated (and are flat out wrong). In fact I would say that Java has even more reason to live with this acquisition.
Java is no longer just applets.
Whatever Oracle is buying, it's not Java itself. It is, however, the core team of Java developers, assuming they don't walk. My guess is that a lot of them will, as soon as they can. Though in this economy that might not be very soon. Oracle's development culture is not a good fit with Sun's.
If they don't want to go 4 years without a raise because Oracle doesn't have the money, they need to leave... ask ex-Siebel employees...