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Tech Check
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Looks like a deal for Sun [JAVA
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] won't be happening any time soon, at least with IBM [IBM
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], according to the The Wall Street Journal, which was the first to break news that advanced talks were underway.
In fact, as late as Friday, it seemed a deal between the two was imminent, and that a merger could have been announced today or pre-market on Monday. Instead, the Journal says Sun's demand of a price higher than $9.40 a share, along with assurances that IBM would see the deal through even with expected Federal anti-trust scrutiny, and IBM's demand of exclusive negotiations turned the deal "confrontational" and Sun walked. Now the New York Times says the deal is off too.
Talks of a collapse are not all that surprising. Fact is, when this deal became public a couple of weeks ago, many thought a deal was imminent. Instead, worry about price, government review and integration have all dogged the deal from the get-go. And the longer it dragged on, the more chance there was for it to fall apart.
What will be interesting is if IBM or Sun issues a statement since neither has confirmed any discussions were underway. Intel CEO Paul Otellini recently said in an internal communique that Sun had been shopping itself over the past year, and that Intel, HP, Dell and Cisco had all passed.
Initially, talks centered around a deal valued at between $10 and $11 a share in what could have been an all-cash transaction. I was then told that the all-cash price, while accurate, didn't include the stock component that IBM was said to be offering, which could have driven the price even higher. Yet Sun reportedly agreed to a lower price, at under $10 a share, if IBM agreed to follow through on the deal even if government pressure was exerted to thwart it. A source says that IBM agreed, but then took its asking price below what Sun would consider and the two parted ways.
A deal is still possible, the Journal says, but with the rift widening between the two, my source says the deal is not now imminent.
Correction: An earlier version of this post had the incorrect ticker for Sun - this was an editing error which has now been corrected.
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