(WEB HOST INDUSTRY REVIEW) — In a move that sent its share prices plummeting 25 percent, Sun Microsystems (www.sun.com) rejected a $7 billion acquisition offer from competing hardware and software provider IBM (www.ibm.com).
According to national news sources, Sun pulled the plug on IBM’s deal, which seemed its only means of survival. Building its reputation in the 90′s, the once-illustrious Silicon Valley firm has been losing market share since the dot-com bubble burst, an event from which the company had never fully recovered.
Sun’s board of directors broke off exclusive talks on Saturday, April 4, because it was unhappy with IBM’s offer of $9.40 per share or below, according to a Bloomberg report, citing an anonymous source not allowed to speak publicly about the topic.
According to a Reuters report, the deal would likely have helped IBM improve its servers, storage and software offerings to compete with rivals such as Hewlett-Packard (www.hp.com), however it is now unclear if talks will resume.
As the WHIR reported in March, when acquisition talks began, IBM’s courting of Sun is considered unorthodox, with the company known to focus its acquisition efforts on software and services companies rather than hardware. For instance, last year IBM bought Canadian software developer Cognos for $5 billion, its largest acquisition to date.
For now, Sun may have to look elsewhere to find a buyer, however, Reuters notes that there are no offers on the table and it is entirely possible that any further deals will be valued less than IBM’s offer.
