IBM is reportedly in talks to purchase Sun Microsystems, an acquisition that would help Big Blue’s competitiveness against archrivals HP and Cisco Systems and would be a huge relief for Sun’s share owners. 

 

The transaction may be finalized for the sum of at least $6.5 billion, according to a report on the issue from The Wall Street Journal. Sun Microsystems is currently capitalized at $3.7bn ($4.97/share). If the deal goes down for this sum, it would consume more than two thirds of IBM’s money. If it is finalized, this would be IBM’s largest acquisition ever and will give the company what it needs to strengthen its top spot in the server market. 

 

Currently, IBM has a market share of about 33 percent, a bit more than HP’s 30 percent share. The acquisition of Sun Microsystems would boost its market share 9.6 percent to 43 percent, according to Credit Suisse estimations. 

 

The company has struggled to revive it financial situation and its latest launch of the Solaris operating system and hardware failed to meet expectations due to decreasing demand. 

 

To keep its head above water, Sun laid off more than 6000 employees and reorganized into three units a few months ago after recording a loss of approximately $500 million.

 

According to the Wall Street Journal report, Sun Microsystems has been trying to get itself bought lately and HP was also mentioned as a potential buyer. 

 

Sun and IBM are longtime rivals, but that doesn’t mean that they can’t become friends, even brothers. The two companies may complete each other and make more money together than fighting each other.