|Sun Board to Meet Tomorrow as Talks With IBM Dissolve |
By Connie Guglielmo and Katie Hoffmann
April 7 (Bloomberg) -- Sun Microsystems Inc.’s board plans to meet tomorrow to discuss the collapse of acquisition talks with International Businestrss Machines Corp. and next steps for the company, according to a person familiar with the matter.
Chief Executive Officer Jonathan Schwartz and the board, including co-founder Scott McNealy, unanimously rejected a buyout offer from IBM last weekend that valued Sun at about $7 billion, the person said. The talks have gone quiet for now, the person said today.
Schwartz had a heated debate with McNealy, who was part of a minority group of directors that objected to the acquisition, the person said. McNealy, who co-founded Sun 27 years ago, turned over the CEO role to Schwartz in 2006. Schwartz wanted the deal to happen, although he concluded that it wasn’t in Sun’s best interest because the price was too low and there was little certainty that the merger would close, the person said.
“IBM would seem to be in the driver’s seat,” said Michael Shinnick of Wasatch Advisors Inc. in South Bend, Indiana. The firm manages assets of about $4.5 billion, including 1.1 million Sun shares. “I don’t think it’s likely other suitors emerge.”
Shawn Dainas, a spokesman for Sun, didn’t immediately return a call seeking comment. Edward Barbini, an IBM spokesman, declined to comment.
Sun, based in Santa Clara, California, fell 22 cents, or 3.4 percent, to $6.34 at 3:49 p.m. New York time in Nasdaq Stock Market trading.
Schwartz, 43, is facing pressure to resuscitate earnings growth amid a slowing market for computer servers, the powerful machines that run company networks and Web sites. Sales at Sun, the fourth-biggest server maker, have slowed for four straight quarters and the company may post an annual loss of $1.24 billion this fiscal year, according to analysts’ estimates.
Sun’s shares have fallen about 25 percent since the two companies broke off merger talks over the weekend.
In a statement yesterday, Sun said it is “committed to its leadership team, growth strategy and building value for its shareholders.”
To contact the reporters on this story: Katie Hoffmann in New York at firstname.lastname@example.org; Connie Guglielmo in San Francisco at email@example.com
Last Updated: April 7, 2009 15:51 EDT