IBM, Sun Microsystems cold on deal

Sign outside of the Sun Microsystems headquarters in Santa Clara, Calif.

TEXT OF STORY

Steve Chiotakis: IBM seemed poised to buy Sun Microsystems late last week in a deal valued in the billions of dollars. It would have been among the biggest in IBM's history. But a disagreement between the two companies' boards of directors over the weekend may have put this merger on ice. Here's Marketplace's Steve Henn.


Steve Henn: Sun Microsystems' board was reportedly worried that the proposed deal gave IBM too much freedom to walk away at the first sign of trouble. The biggest fear was that American or European anti-trust regulators might impose tough conditions on the deal, and that IBM might decide in the end it wasn't worth.

Together, IBM and Sun would control almost half the global market for computer servers and dominate the market for tape-based storage systems. Regulators on either side fo the Atlantic could have forced the combined firm to spin off pieces of those businesses to preserve competition.

Sun agreed to accept a lower price in return for promises that IBM wouldn't walk away. But in the end Sun's board didn't get the kinds grantees it was looking for. And last night, IBM withdrew its offer.

Sun's having one of its worst years this decade, and its stock, which had up sharply on merger rumors, fell close t0 30 percent in European trading this morning.

In Washington, I'm Steve Henn for Marketplace.

About the author

Steve Henn was Marketplace’s technology and innovation reporter for the entire portfolio of Marketplace programs until December 2011.

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