Sun Reportedly Haggling With Apple Over Price
Sun Microsystems Inc.’s negotiations to buy troubled Apple Computer Inc. continued Thursday amid wildly conflicting reports over the price that is being discussed, and sources close to the talks say it remains unclear whether any agreement will be reached.
Reports in the Wall Street Journal this week have said a deal in which Sun would buy Apple for about $4 billion in stock, or $33 a share, is all but complete. But a source familiar with the discussions told The Times that there are factions in both camps that continue to oppose a deal, and pegged the chances of an agreement being reached at just 50-50.
Meanwhile, the New York Times reported Thursday that Sun had offered Apple just $23 a share, or about $2.8 billion--a price far less than Apple’s current market value. Apple shareholders were horrified at that idea, and some Sun shareholders also began to express reservations about the risks associated with an Apple merger.
“Would we fight at $23 a share? You bet. There could be problems even at $33,” Marian Kessler, portfolio manager at $4.3-billion Crabbe Huson Group--which owns about 1 million Apple shares--told Bloomberg Business News.
In Nasdaq trading Thursday, Apple stock fell $2 to close $30.25, and Sun added 37.5 cents to close at $43.875.
A major Sun investor, who declined to be named, said he told management that there is no way he would vote for an offer of $33 a share, and that he is not sure he would go for $23 a share, either. “When we first heard they were going to pay $33, we were quite upset. We made those feelings known,” the investor told Bloomberg.
The conflicting newspaper reports appear to reflect some gamesmanship on the part of the two parties, which may be floating trial balloons and trying to influence the share prices of both companies.
Although Apple has declined previous takeover offers--including a bid from International Business Machine Corp. last year that was said to be $40 a share--because the price was too low, the company’s deteriorating financial position has clearly undermined its bargaining position. The company posted a loss of $69 million for the quarter ended Dec. 29 and expects further losses in the current quarter.
Sun, eager not to overpay in what could be a risky acquisition, appears to believe it can take its time while Apple’s share price falls. But some at Apple believe the company should hold out, sources said.
“There are some people at Apple who think the company may be at a low ebb right now, but there are a lot things in the pipeline that could bring the company back,” said a person close to the talks. “They prefer think that it should go it alone.
“And on the Sun side, there are people who think that Sun is doing very well, especially with its Internet strategy, and that buying Apple with all its problems would be an anchor.”
