Posted by: Tom Nolle
IBM, mergers and acquisitions, Networking, Sun Microsystems
There are reports that the Sun/IBM deal is off because of a breakdown in talks over the price. Some say this is a negotiating ploy, but others have said there is really an irreconcilable difference here.
Is this a Microsoft/Yahoo reprise? Most expect the deal to revive when Sun’s market price falls, particularly if shareholders file suit against the board. Some of the issues were payments to Sun executives and terms to prevent IBM from changing its mind. We think the big question on IBM’s side is just how much of Sun’s incumbency in the networking world could be monetized by IBM without simply moving Sun’s full product line and head count over into IBM.
Lacking major symbiosis, the premium IBM would have paid over market price would only be justified by assuming major reductions in costs through consolidation, meaning most of Sun’s workforce would have to go.