IBM said to be ready to buy Sun Micro

Bloomberg News

IBM Corp. is planning to announce its purchase of Sun Microsystems Inc. on Monday, a person familiar with the matter said Thursday.

IBM intends to pay $9 to $10 a share for Sun, said the person, who declined to be named because the talks were still underway. At those prices, it would be the largest acquisition in IBM’s history.

The purchase would give IBM almost half of global server-computer sales and Sun’s software portfolio, including the Solaris operating system. A deal could spark more consolidation in the industry, said Shaw Wu, a San Francisco-based analyst with Kaufman Bros.

“It’s almost like a chess game -- what’s your move,” said Wu, who doesn’t own shares of IBM or Sun.


IBM spokesman Ed Barbini declined to comment. Sun spokesman Shawn Dainas didn’t immediately return a call seeking comment.

Sun shares, which jumped 79% on March 18, the day the deal was first reported, have since fallen 7.6% on speculation a deal would fall through.

Sun, based in Santa Clara, Calif., rose as much as 24 cents to $8.45 in extended trading after gaining 21 cents to $8.21 during regular trading Thursday. Shares of Armonk, N.Y.-based IBM climbed $3.21 to $100.82.

Sun makes about half its sales from servers, which run corporate networks and websites. It counts AT&T; Inc. and China Mobile among its customers.


Sales of servers fell 14% industrywide in the fourth quarter as businesses reined in spending in the recession, according to researcher IDC in Framingham, Mass.

IBM Chief Executive Samuel J. Palmisano, who took the helm in 2002, said last month that he planned “to go on offense” during the recession and make acquisitions.