| By Maureen O'Gara | Article Rating: |
|
| April 5, 2009 11:45 PM EDT | Reads: |
2,629 |
Sun's board rejected a formal IBM offer for the company Saturday as too low, according to the Wall Street Journal.
Apparently the price IBM offered was $9.40 a share or less, down from a reported $9.55 late last week.
IBM pulled its roughly $7 billion offer off the table on Sunday, according to the Journal, the AP and the New York Times, after Sun terminated IBM's exclusive bargaining rights.

No news outlet could say whether the rift is tactical or whether it will be mended.
The AP claimed it heard the two sides were still meeting Sunday. The Journal then waded in and said the companies were "still in touch by phone" and that the situation was "fluid."
Unless the talks get back on track, Sun's stock price, bid up to $8.49 Friday in anticipation of a deal Monday, may crash.
Sun, which shopped itself around for months, according to Intel CEO Paul Otellini, is believed to be pretty much in a corner with no other acquirer likely, particularly at such a premium, roughly double its stock price when news of the talks leaked out on March 19.
The price originally heard was $10-$11 a share but that did not appear to survive IBM's due diligence.
As of last week Sun was reportedly willing to accept a cut provided IBM committed to completing the deal despite what may be long and intense antitrust scrutiny particularly around their Unix server and tape storage interests. IBM+Sun represent 65% of all Unix boxes and a monopoly in tape.
The Journal said last Thursday that "Sun's board wants to limit IBM's ability to exit the deal," which could face regulator strings.
On Sunday, the paper said Sun felt IBM had "too much leeway to walk away from the deal." The Times said IBM felt the guarantees Sun wanted were "onerous."
Although it's assumed they got some sort of informal ruling from the regulators early on, the Journal suggested Sun wanted an undertaking from IBM to close the deal even if regulators ultimately demanded divestiture.
The Times said that IBM lowered its price because the payoffs in the "change of control" contracts with Sun executives, senior engineers and managers were "higher and extended more broadly across the company than it had anticipated." That ought to raise stockholders' hackles.
Most industry observers are amazed that IBM was willing to pay even $9.55 for Sun. Six dollars would seem more appropriate to them.
It would be IBM's largest acquisition ever.
It is unclear what else IBM might buy instead of Sun since CEO Sam Palmisano has indicated he's interested in acquisitions.
Published April 5, 2009 Reads 2,629
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Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025.
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