Sun Shareholders Vote to Accept Oracle Acquisition
No Sun C-level executives were in the room when the vote was taken. Sixty-two percent of the outstanding shares were voted in favor of the deal, Sun said. Due diligence continues at the federal level for the proposed $7.4 billion transaction.
SANTA CLARA, Calif.-It took Sun Microsystems 27 years
to get it to where it is today as one of the world's most innovative IT
companies. It took exactly three minutes on July 16 to obtain approval
from stockholders for the company to lose its independent status and
become property of longtime business partner Oracle.
No Sun C-level executives were in the room at the George Sellon Circle Auditorium here on the main Sun campus when the vote was taken from about 160 shareholders-most of whom were Sun employees. The voting at the meeting was opened at 10:02 a.m. Pacific time and closed at 10:05 a.m.
"Well, it looks as though Sun went out with a whimper," one shareholder said as he left the meeting.
General Counsel and Senior Vice President Mike Dillon and Craig Norris, vice-president of corporate law, ran the meeting. Shareholders were mailed their proxy cards and were able to vote online, by phone, by mail or in person at the meeting.
Afterwards, Sun spokesperson Dana Lengkeek reported that 62 percent of the share of Sun common stock "outstanding as of the record date of the meeting" voted to adopt the agreement to sell the company to Oracle for $9.50 per share, for a total of about $7.4 billion.
Sun's board of directors voted unanimously last month to approve the deal, which was announced April 20 to the surprise of many people following a months-long, not-so-secret takeover attempt by IBM.
Board chairman and co-founder Scott McNealy was not at the shareholders' meeting. Shareholders were told that President and CEO Jonathan Schwartz was sick at home and not able to attend.
The transaction is currently being reviewed by the U.S. Department of Justice for potential antitrust issues. The DoJ decided on June 26 to take a second 30-day period of time to continue its due diligence regarding the proposed transaction.
"This is not unexpected," a Sun spokesperson 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. In comparison, Cisco Systems-for example-is valued at about $115 billion.
Ellison Building a New All-Purpose Systems Company
With the pending acquisition of Sun, Oracle founder and CEO Larry Ellison is on the way to building a new all-purpose systems corporation to compete head-on with IBM and Hewlett-Packard. Oracle already is the largest and most profitable middleware software vendor in the world; if it adds Sun's Java, storage and server franchises, it would immediately become one of the world's top 10 IT systems makers.
"This is really what Sun needs-a strong presence like Larry [Ellison] to decide what product line he wants, and then go out and execute," a longtime Sun employee and shareholder, who asked not to be identified, told eWEEK. "That's been Sun's problem all along: incredibly bad, short-sighted management.
"We have the products. We have the intellectual property. We have the creative spark. We never had the execution, that's been the problem. We just didn't have the right vision. We'd have these great, well-thought-out product launches, and make a big splash. Then, whoosh-it would be forgotten, because the company was on to the next thing. Meanwhile, the last big launch was left behind."
Sun never was able to get its mission understood by the masses, a former Sun executive and longtime shareholder said.
"The only people who knew what Sun really did were our suppliers and our customers," he said. "We never were able to explain to people what we really did. When they were told personally, people understood. 'Oh, Sun makes Java? I always thought Microsoft made Java,' stuff like that.
"We can create the products, we just weren't able to explain very well what they did and how they affected business."
Shareholders Seem Satisfied With the Deal
Generally, shareholders at the meeting seemed satisfied with the terms of the acquisition.
"I think the deal is the best one we could get, for sure," another shareholder told eWEEK. "I was worried there for a while nothing was going to happen. I'm glad IBM didn't do the deal, though. Oracle is a much better fit."
"I think $9.50 [per share] seems like a low price for the company, but it's the best deal we've got going," another shareholder said. "We have to take it. Not too many alternatives!"