Oracle Buys Sun in Cash Deal, Gets Java and Solaris

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Oracle calls Java the most important piece of software that Oracle has ever acquired in announcing its plans to buy Sun Microsystems for $7.4 billion. Word of the deal comes just days after reports said all bets were off on a reported IBM acquisition of Sun.

Database and ERP giant Oracle (NASDAQ:ORCL) has emerged from the shadows as the company that will acquire Sun Microsystems (NASDAQ:JAVA) in a deal worth $7.4 billion, or $9.50 per share, in cash. IBM (NYSE:IBM) and Sun had been reported to be in talks on a deal starting in March, but negotiations fell apart over price.

Click here to read what Oracle says the deal will mean to Sun and Oracle channel partners.

"The acquisition of Sun transforms the IT industry, combining best-in-class enterprise software and mission-critical computing systems," says Oracle CEO Larry Ellison, in a prepared statement. "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."

In announcing the deal, Oracle pointed to two key Sun software assets: Java and Solaris. Oracle has acquired software companies at a rapid pace over the past several years, but Oracle states in the release announcing the Sun deal that Java is "the most important software Oracle has ever acquired." Oracle says that its Oracle Fusion Middleware is its fastest growing business and 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," Oracle says in its formal statement announcing the deal.

Oracle also notes that Sun’s Solaris operating system, a Unix OS, is the leading platform for the Oracle database, which is Oracle’s largest business. Oracle says Linux is the No. 2 OS for its database, and Oracle remains committed to the Linux OS and other open platforms.

"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," said Jonathan Schwartz, Sun’s CEO, in a formal statement. "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."

Oracle says the deal is worth $7.4 billion, or $5.6 billion net of Sun’s cash and debt.

Oracle President Safra Catz says Sun’s acquisition will contribute over $1.5 billion to Oracle’s non-GAAP operating profit in the first year, increasing to $2 billion in the second year. Catz says that means Sun will be a more profitable-per-share contribution in the first year than Oracle had planned for the acquisitions of BEA, PeopleSoft and Siebel combined.

Jessica Davis covers the channel for eWeek and Channel Insider. Her technology journalism career began well before anyone heard of the World Wide Web and has included stints at Infoworld, Electronic News/EDN, and the Philadelphia Business Journal. Her work has also appeared on CNN and Forbes.com. She has covered hardware, software and networking, as well as the business side of technology. She has won several journalism awards, including a national ASBPE award for best staff-written column, and was named Marketing Computers hardest working tech journalist on their inaugural list of top tech journalists. Jessica can be reached at jessica.davis@ziffdavisenterprise.com

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