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No More Sun for IBM

Category: Manufacturers
Posted: 08:40AM

On Sunday, IBM withdrew its $7 million offer to Sun Microsystems. This was after Sun's board complained at a plan introduced by IBM for a reduced offer. Had the deal gone through, IBM would have been the main supplier of high-end Unix servers. This could have presented legal problems in the form of anti-trust lawsuits, as well as contracts with IBM competitors. This caused IBM to reduce the offer from $9.55 a share to $9.40 a share. Sun then countered by saying it wouldn't abide by its exclusive negotiating agreement with IBM. IBM countered by saying the deal was off. The two companies had been haggling over details for a while: IBM felt that senior employees had too high of pay, relatively, and that too many employees were getting the pay; Sun was most concerned about making sure IBM couldn't just up and walk away from the deal. Whether or not removing the deal from the table is a tactic by IBM to get Sun to agree to their demands is unclear at the moment. However, if Sun's share prices drop below its Friday closing price of $8.49, expect major investors to push the company back into negotiations to seal the deal.

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