IBM is now in negotiations to purchase Sun Microsystems, as the struggling company tries to survive in a very turbulent global economy. The Wall Street Journal has published details about the proposed deal.
IBM is reportedly willing to spend up to $6.5 billion in cash and stock for Sun, the WSJ said without naming sources. If true, that's about double the closing price of Sun's stock last week -- a discount considering how Sun has struggled on the stock market for the past 12 months.
Both Sun and IBM sell computer systems that don't rely on the Microsoft Windows operating system or Intel's CPUs, and a possible buyout will strengthen IBM's product lines. IBM currently rules the server market, and the buyout would help IBM strengthen its lead in the extremely competitive $53.1 billion market.
Recent talks of a possible buyout have led to Sun's stock on the European market to surge 61 percent, increasing from $2.28 per share up to $6.
Sun previously spoke with Hewlett-Packard regarding a possible merger, but talks promptly fell through. If IBM is able to close the deal, the company will have a strong strategic advantage against its main competitor.
Sun Microsystems has struggled over the years while trying to get users to adopt its Solaris operating system. Furthermore, Sun also found it very difficult to try and monetize software that it gives away for free, even when the company attempted to focus more on support.
IBM has proven it can properly monetize free software, and would be able to build on Sun's strong reliance on developing open source technologies.
The deal could be done as early as this week, or it could fall apart completely, negotiation insiders have warned.
quote: Sun basically gave away Java which was probably worth many billions of dollars if they had a reasonable stragegy for making money off of it. Fools.
quote: This is one merger I don't want to see happen.