International Business Machines Corp. is planning to announce its purchase of Sun Microsystems Inc. on April 6, a person familiar with the matter said.
IBM intends to pay $9 to $10 a share for Santa Clara, California-based Sun, said the person, who declined to be named late yesterday as the talks are still under way. At those prices, it would be the largest acquisition in IBM’s history.
IBM is Boulder’s largest private-sector employer with about 3,400 workers at its campus in north Boulder. Sun is Broomfield’s biggest, with an estimated 2,500 workers at its facility in Broomfield’s Interlocken business park.
Some experts have predicted job cuts if the deal goes through.
Buying Sun would extend IBM’s lead over Hewlett-Packard Co. in server-computer sales to almost half of the global market, helping it to boost volumes as demand for the machines wanes in the recession. A deal may lead more technology companies to combine as the industry shrinks, said Shaw Wu, an analyst at Kaufman Bros. in San Francisco.
“It’s almost like a chess game,” said Wu, who doesn’t own shares of Sun or Armonk, New York-based IBM. “Sometimes it’s one company that serves as a catalyst in terms of strengthening their competitive position, and it causes others to reevaluate.” IBM spokesman Ed Barbini declined to comment yesterday. Sun spokesman Shawn Dainas didn’t return a call seeking comment.
Sun rose 23 cents to $8.44 at 10:01 a.m. in Nasdaq Stock Market trading. The shares rocketed 79 percent on March 18, the day the deal was first reported. IBM rose 30 cents to $101.12 in New York Stock Exchange composite trading.
Technology spending by U.S. businesses and government will fall 3.1 percent this year, Forrester Research Inc. analyst Andrew Bartels said last month. The research firm had previously forecast a 1.6 percent increase in spending.
Sun Customers Sun makes about half its total sales from servers, which run corporate networks and Web sites. It counts AT&T Inc. and China Mobile Ltd. among its customers.
Sun is the fourth-largest maker of servers, behind IBM, Hewlett-Packard and Dell Inc. Last month, Cisco Systems Inc., the biggest maker of networking equipment, introduced its first server system.
“Cisco entering the server space could have also set off ideas for deals,” said Wu at Kaufman Bros. “Sometimes it’s one company that serves as a catalyst in terms of strengthening their competitive position and it causes others to re- evaluate.” Sales of servers fell 14 percent industrywide in the fourth quarter as businesses reined in spending in the recession, according to researcher IDC in Framingham, Massachusetts.
IBM, whose software division is its most profitable, would also gain Sun’s software portfolio, including the Solaris operating system, which competes with Linux and Microsoft Corp.’s Windows. Sun also acquired software company MySQL AB, obtaining programs that develop databases.
IBM Chief Executive Officer Sam Palmisano, who took the helm in 2002, said last month he planned “to go on offense” during the recession and make acquisitions.
