NEW YORK – Information technology company Oracle Corp. said Monday it is buying Sun Microsystems Inc. in a cash deal the company valued at $7.4 billion after IBM abandoned its bid to buy the networking equipment maker.
Redwood Shores, Calif.-based Oracle will buy Sun shares for $9.50 each in cash. The price represents a 42 percent premium to Sun's Friday closing stock price of $6.69. Net of Sun's cash and debt, the transaction is valued at $5.6 billion, Oracle said.
IBM had offered to buy Sun for $9.40 per share, but acquisition talks fell apart earlier this month. Sun balked at the price and canceled IBM's exclusive negotiating rights, leading IBM to withdraw its offer.
Oracle expects the purchase to add at least 15 cents per share to its adjusted earnings in the first year after the deal closes. The company estimated Santa Clara, Calif.-based Sun will contribute more than $1.5 billion to Oracle's adjusted profit in the first year and more than $2 billion in the second year.
