IBM/Sun Microsystems deal breaks down

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IBM/Sun Microsystems deal breaks down

Talks between IBM and Sun Microsystems over a possible merger are reported to have broken down after the two IT giants failed to agree terms.

The deal was hit by delays after lawyers grappled with the due diligence process, but seemed to be progressing.

However, reports on the web claim that Sun's board rejected a formal offer of US$9.40 per share from IBM on Saturday, saying that the price was too low.

The offer was down slightly from the original price of US$9.55, which valued the company at around US$7bn.

Sun has since ended its status as IBM's exclusive negotiating partner, prompting IBM to withdraw its offer completely.

The combined entity would have commanded more than 40 per cent of the server market, and had a dominating position in IT services and tape storage, and there were concerns that competitors would initiate anti-trust cases against the merger.

Reports had suggested that, as part of the deal, Sun was seeking an agreement that IBM would go to court if challenged, rather than cancelling the purchase. IBM was not willing to commit to this proposal.

Sun stated that it is now open to negotiations with others, but there do not appear to be any potential suitors on the horizon.

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