Sun Agrees to Buy Server Appliance Firm Cobalt Networks

Sun Microsystems Inc. said it is buying Cobalt Networks in a $2-billion stock deal, a move designed to strengthen the company’s entry in the server appliance market. Sun is a leading maker of high-end servers that power corporate networks and Web sites. The proposed acquisition of Cobalt means Sun plans to expand into the growing arena of server appliances, which are geared to specific tasks and are typically less expensive. The acquisition would be the largest in Sun’s history and its sixth so far this year. Under the deal, Sun said, each Cobalt common share will be converted into half a share of Sun stock. The acquisition is expected to be completed by Dec. 31. Cobalt’s shares jumped $16.06 to close at $57.19 on Nasdaq. Sun’s shares rose $2.44 to close at $117.69, also on Nasdaq. Both companies are based in Mountain View, Calif.