14 DAY TRIAL // According to the latest details, IBM could back away from the negations it was reportedly undergoing with the board of directors at Sun Microsystems. Apparently, Sun's board rejected the formal offer delivered by IBM on Saturday, also sending a notice that the company didn't want to continue its exclusive negotiations with IBM. If true, the news would threaten Sun's opportunity to be a member of the Big Blue family, as part of a potential $7 billion acquisition.
Earlier this year, a series of reports emerged, according to which IBM and Sun, two major players in the server computer market, were in talks regarding a possible merger. The news was fueled by Sun's weakened market position that saw its stock price in the $4 to $5 range. In addition, IBM's interest in Sun is strongly related to the company's commitment to develop its business for “cloud computing,” a market segment that continues to grow, despite its still-far-from-general market adoption.
According to a recent news-article on the online version of The Wall Street Journal, the situation between the two companies is said to be confrontational, as part of the board of directors reportedly refused to continue the negotiations with IBM. Apparently, a group led by Sun's chairman and co-founder, Scott McNealy, opposed the transaction with IBM, while a group led by CEO Jonathan Schwartz was in its favor.
Despite no official word on the value of the transaction, people close to the matter have put the price in the range of $9.10 to $9.40 a share. This is a considerable increase in market share, compared to what the company's shares were before the reported negotiations. However, Sun investors were initially expecting something in the range of $10 to $11 a share.
At this time, the situation between Sun and IBM looks familiar to that of Microsoft and Yahoo, which were in talks of a possible merger last year. Currently, there's no official statement coming from neither IBM nor Sun.