IBM in talks to buy Sun Microsystems: sources

IBM is in talks to buy Sun Microsystems Inc, sources with knowledge of the matter said, a move that could bolster the technology giant against rivals in the high-end computer server and software markets. International Business Machines Corp is offering to pay over $6.5 billion, between $10 and $11 a share, The Wall Street Journal reported in its online edition. That would be double Sun's Tuesday closing price of $4.97. Shares of Sun jumped 81 percent to $9.01, while IBM shares fell 2 percent to $90.89 after the Journal reported that a deal was expected to be announced this week. Such a deal would be IBM's largest-ever acquisition, and lead to the creation of a massive technology firm offering both computer hardware, software and services. Analysts saw the move as part of a consolidation trend, as Hewlett-Packard Co, IBM and Cisco Systems Inc jostle for control of corporate data centers and compete to supply the high-end computers that power complex corporate transactions and networks. "They need to make sure that they have a suite of products, to be on the leading edge, so they have dominant share," said Zach Rosenstock, analyst at Wayne Hummer Wealth Management. "My feeling is that the good players with good technology and products will eventually get taken out by the bigger guys who have the means to do it and understand that it's easier to buy them than to mimic them through internal development."

Source: http://tech.yahoo.com/news/nm/20090318/tc_nm/us_sunmicro_ibm_3