Sun Calls DOJ Slowdown of Oracle Deal Simply an Irritation

Oracle certainly would like to complete its acquisition of Sun Microsystems as soon as possible, but the Department of Justice has, in effect, told the enterprise database giant: "Not so fast."

A deadline for the Department of Justice to file an "all-clear" affidavit passed after 30 days at the end of business on June 26. Approval would have allowed the proposed acquisition of Sun for $7.4 billion to proceed to the next levels of scrutiny: the Federal Trade Commission and the Securities and Exchange Commission.

The DOJ, the highest-ranking law enforcement agency in the United States, is empowered to study the potential abuse of antitrust law in corporate mergers and acquisitions—especially those involving multibillion-dollar companies such as Oracle and Sun.

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But Sun, which has been bleeding dollars for nearly 10 years in the new IT economy and has the most to gain from the acquisition, does not appear to be worried about federal scrutiny. In fact, the company told eWEEK this is simply an "irritation."

"This is not unexpected," a Sun spokesperson who asked not to be identified told eWEEK. "The new [Obama] administration is looking [more closely] at all mergers and acquisitions, by necessity. They're looking deeply into all aspects of the economy.

"This is too big a transaction for them to simply let go through on the first pass."

A combined Oracle-Sun corporation would have a market capitalization of about $115 billion. At the present time, Oracle's market cap is about $107.6 billion; Sun's is just below $7 billion.

Experts: Plenty of separation in product lines

IT analysts and industry people contacted by eWEEK said they believe that Oracle and Sun have sufficient separation in their product lines that a block on the acquisition plans isn't warranted. 

Oracle is the world leader in enterprise database and IT middleware tools, and produces little or no hardware; Sun is a multifaceted IT systems company that makes enterprise networking software—nearly all of which, including Java, is of the open-source variety—as well as enterprise servers, storage arrays, digital tape storage machines, networking switches, thin-client terminals and a long list of other hardware products.

One of the main areas of overlap, certainly, is in databases: Sun is the de facto leadership owner of development of the open-source MySQL franchise, while Oracle's prime-time products are its proprietary Oracle i series, Siebel and PeopleSoft enterprise databases.  With the addition of MySQL, Oracle would own even more than its lion's share—estimated at about 75 percent—of the parallel enterprise database market.

The DOJ may well see some potential antitrust problems there, but it also should be noted that there are plenty of other contenders that are quite profitable in this market, led by Germany's SAP and the open-source Ingres product.