Oracle Corporation and Sun Microsystems have entered into a definitive agreement under which Oracle will acquire Sun common stock for $9.50 per share in cash. The transaction is valued at approximately $7.4 billion, or $5.6 billion net of Sun’s cash and debt.
“The acquisition of Sun transforms the IT industry, combining best-in-class enterprise software and mission-critical computing systems,” said Oracle CEO Larry Ellison. “Oracle will be the only company that can engineer an integrated system – applications to disk – where all the pieces fit and work together so customers do not have to do it themselves.”
“We expect this acquisition to be accretive to Oracle’s earnings by at least 15 cents on a non-GAAP basis in the first full year after closing. We estimate that the acquired business will contribute over $1.5 billion to Oracle’s non-GAAP operating profit in the first year, increasing to over $2 billion in the second year. This would make the Sun acquisition more profitable in per share contribution in the first year than we had planned for the acquisitions of BEA, PeopleSoft, and Siebel combined,” said Oracle president Safra Catz.
There are long-term strategic advantages to Oracle owning two key Sun software assets: Java and Solaris. Oracle Fusion Middleware is built on top of Sun’s Java language and software.
The Sun Solaris operating system is the leading platform for the Oracle database. Now, Oracle can optimize the Oracle database for some of the high-end features of Solaris.
“Oracle and Sun have been industry pioneers and close partners for more than 20 years,” said Sun chairman Scott McNealy. “This combination is a natural evolution of our relationship and will be an industry-defining event.”
According to Oracle, the Board of Directors of Sun Microsystems has unanimously approved the transaction. It is expected to close this summer.
