Oracle has surprised the industry by entering into a definitive agreement to buy Sun Microsystems days after IBM pulled away from talks to acquire the Silicon Valley-based hardware and software company.
In terms of the agreement, Oracle will acquire Sun common stock for $9,50 per share in cash, which values Sun at about $7,4-billion.
"We expect this acquisition to be accretive to Oracle's earnings by at least 15 cents on a non-GAAP basis in the first full year after closing," says Oracle president Safra Catz. "We estimate that the acquired business will contribute over $1,5-billion to Oracle's 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."
Oracle CEO Larry Ellison comments: "The acquisition of Sun transforms the IT industry, combining best-in-class enterprise software and mission-critical computing systems.
"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."
Ellison adds that there are substantial long-term strategic customer advantages to Oracle owning two key Sun software assets: Java and Solaris. Java is one of the computer industry's best-known brands and most widely deployed technologies. Oracle Fusion Middleware, is built on top of Sun's Java language and software. Oracle can now ensure continued innovation and investment in Java technology for the benefit of customers and the Java community.
The Sun Solaris operating system is the leading platform for the Oracle database, and the acquisition will allow Oracle to optimise the database for some of the high-end features of Solaris.
"Oracle and Sun have been industry pioneers and close partners for more than 20 years," says Sun Chairman Scott McNealy. "This combination is a natural evolution of our relationship and will be an industry-defining event."
Sun CEO Jonathan Schwartz adds: "This is a fantastic day for Sun's customers, developers, partners and employees across the globe, joining forces with the global leader in enterprise software to drive innovation and value across every aspect of the technology marketplace.
"From the Java platform touching nearly every business system on earth, powering billions of consumers on mobile handsets and consumer electronics, to the convergence of storage, networking and computing driven by the Solaris operating system and Sun's Sparc and x64 systems. Together with Oracle, we'll drive the
innovation pipeline to create compelling value to our customer base and the marketplace."