Oracle to Buy Sun (Updated)

In its latest—and largest—acquisition attempt, Oracle, which has amassed a series of huge enterprise companies to service a broad range of sectors including insurance, has reportedly made an offer for Sun Microsystems, founder of open source Java technology.

Oracle is offering $9.50 a share in a cash deal valued at $7.4 billion. The offer comes weeks after Sun rejected a bid from IBM, citing dissatisfaction with the price. In a bid that clearly tops its competitors, Oracle said the deal is valued at $5.6 billion net of Sun's cash and debt, MarketWatch reports.

The failed IBM bid was the result, sources said, of unexpected delays in getting antitrust clearance for the deal, which led Sun to press IBM for guarantees it wouldn't abandon the transaction, The Wall Street Journal reports. Oracle is likely to face fewer problems, since it is in fewer businesses in competition with Sun, said the Journal.

After its acquisition of software providers PeopleSoft, Siebel Systems and BEA Systems, Oracle is placing its interests squarely into the platform/hardware arena.

In a conference call, Larry Ellison, Oracle's chief executive, described Java as "the single most important software asset we have ever acquired." If the deal goes through, Oracle should be able to offer a host of computers and data storage hardware along with a variety of application programs that can run on a variety of platforms.

Oracle also said that it plans to create $2 billion in profits for Sun two years after signing the deal, which is expected to be sealed this summer, subject to stockholder approval and other legal conditions.

"There is no question in my mind that this transaction redefines the industry," Scott McNealy, Sun's chairman and co-founder, said during the conference call.