IBM slams door on Sun deal

 

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By Reuters

Posted on 17 Apr 2009 at 08:58

IBM has hammered the final nail in the coffin of its potential deal with Sun, claiming it's not interested in the company "at any price".

Sun was reported to have approached IBM earlier this week in an effort to reopen stalled talks, going as far to say it was flexible on price.

However, IBM reportedly rebuffed the overture, claiming it was no longer interested in the deal which at one point was thought to be worth $7 billion.

Sources report that IBM's case of cold feet was brought on after taking a look at Sun's structured contracts, as well as change of control clauses that would make an acquisition of the company costly.

It is also believes that IBM's contacts within the US Justice Department, Securities and Exchange Commission and EU have all advised the company that such a merger could be subject to an antitrust review lasting six to nine months.

Analysts say a deal may be crucial for Sun's long-term survival as it has been losing market share in servers to IBM and HP. The company is expected to report a third straight quarter of losses.

Despite IBM's protestations, analysts claim Sun's desperation mean a deal will still probably go through: "If the deal made sense a couple weeks ago, it certainly would still make sense today," says Avian Securities' head of research, Avi Cohen. "If there was a willingness, which I think there is, if there was a business case, which I think there is, I think they will start up talks."