Report: IBM to Pay $7 Billion for Sun

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Over the last couple of weeks, talk of Sun has centered around who the company is selling itself to, and for how much. While IBM is more than likely the answer to the first question, today brings a tentative answer to that second question.

Rumors that IBM was set to acquire Sun were what kicked this whole thing off in the first place. After that, there was reports that Sun was shopped around Silicon Valley before arriving at IBM’s doorstep. Then there was news that Sun was realigning itself and letting go a ton of employees, leading a lot of folk to believe it was trimming itself of any fat in order to appear more appealing to potential buyers.

The New York Times today reports that IBM is set to fork out 7 billion for its longtime rival. According to the NYT, which cites people familiar with the discussions (and not authorized to speak publicly, oops), IBM is offering $9.50 a share, down from a bid of $10 a share. Sources said the new agreement would restrict IBM’s ability to walk away from the deal.

Shares of IBM rose more than 3 percent on Thursday, to $100.82, and Sun’s shares rose more than 2 percent, to $8.21.

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Now been withdrawn:

I.B.M. withdrew its $7 billion bid for Sun Microsystems on Sunday, one day after Sun’s board balked at a reduced offer, according to three people close to the talks.

The deal’s collapse after weeks of negotiations raises questions about Sun’s next step, since the I.B.M. offer was far above the value of the Silicon Valley company’s shares when news of the I.B.M. offer first surfaced last month. Sun, an innovative pioneer in computer workstations, servers and Internet-era software, has struggled in recent years and spent months trying to secure a suitor.

With I.B.M. and others shying away from a deal, a bruised Sun could be forced to continue pursuing a solo business model whose prospects have been questioned by many analysts.

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