Sun Stockholders to Vote on Oracle Deal July 16

Sun Microsystems stockholders will vote next month on the proposed $7.4 billion acquisition by Oracle.

Sun officials announced June 8 that the stockholder meeting will be July 16 at the company’s Santa Clara, Calif., campus.

The deal, which would make Sun a wholly owned subsidiary of Oracle, is expected to close sometime this summer, Sun officials said in a proxy statement filed with the federal Securities and Exchange Commission in conjunction with the stockholder meeting notice.

The completion of the deal would end more than seven months of negotiations around the future of Sun, which has lost billions of dollars over the past decade since the dot-com bust, despite the company’s efforts to revive its fortunes through such pursuits as embracing x86 hardware architectures and its aggressive push into the open-source space.

In the SEC filing, Sun officials said the deal with Oracle was the best way to protect the company and its stockholders. Sun was being hurt more than its competitors by the global recession because of the large number of financial services firms that are Sun customers, and because Sun relied more heavily on fewer—and larger—customers than many of its rivals. They also said that other vendors used their size and larger services capabilities to squeeze Sun, and that Sun was hampered by its lack of product diversity and narrow portfolio of businesses.

“Sun has made investments in new initiatives intended to lead to higher growth, such as Sun’s open source software solutions and the convergence of servers, storage and networking enabled by Sun’s Solaris operating system, but these investments have not generated revenues sufficient to meaningfully offset declines in legacy businesses—declines which have accelerated during the current economic downturn,” Sun officials said in the proxy statement.

In that and other filings with the SEC, Sun officials have outlined months of negotiations with Oracle and two other companies that showed interest in buying Sun or parts of the company. Though Oracle has been the only suitor identified in the filings, sources have told eWEEK that the other two were IBM and Hewlett-Packard.

According to the filings, Sun was first approached on Nov. 6, 2008, reportedly by IBM. Negotiations with IBM heated up earlier this year, but hit a snag on issues such as Sun officials seeking a guarantee that IBM would work to complete the transaction even if there were federal antitrust concerns. Eventually Sun’s board of directors approved the sale of the company to Oracle April 19.

The deal will give Oracle the ability to compete with the likes of IBM, HP and Cisco Systems in offering more complete solutions to data center operators.

Oracle CEO Larry Ellison and Scott McNealy, chairman and co-founder of Sun, took the stage at Sun’s JavaOne Conference June 2. Ellison pledged that Oracle would continue to invest heavily in Java, but neither he nor McNealy would address the future of Sun’s hardware business.

Some analysts have speculated that Oracle might want to sell the hardware business to someone else, though Ellison said soon after the deal was announced that he intends to keep Sun’s hardware, which includes servers, workstations and storage devices.

Industry observers mostly have applauded the deal, though some stockholders have filed class-action lawsuits, claiming the $7.4 billion is too low a number for Sun.