Sun Microsystems' board of directors may have all been on the same page in agreeing to the $7.4 billion acquisition by Oracle on April 20, but apparently a good many of Sun's financial backers are into a different book altogether.
Some of those shareholders on May 8 joined forces to file a total of three class action suits to block the corporate transaction, Sun disclosed in a 10-Q filing with the Securities and Exchange Commission.
The suits were filed in Santa Clara County Superior Court and name Sun, several of its executives-including co-founder and Chairman Scott McNealy and CEO Jonathan Schwartz-and Oracle as defendants.
The legal actions claim that the $7.4 billion compensation proposed by Oracle is "unfair and inadequate." The suits also charges Sun and its executive team with "claims for breach of fiduciary duty against the individual defendants and for aiding and abetting a breach of fiduciary duty against the corporate defendants."
Sun spokesperson Dana Lengkeek told eWEEK that the company would have no official statement about the lawsuits immediately, except to say that it would respond "at an appropriate time."
"No doubt, these are the folks who bought Sun [stock] at $20 or more a while back, and aren't particularly excited about getting only half of their money back," an IT industry analyst who asked that his name be withheld from publication told eWEEK. "Can't blame them, really. They have to do what they have to do."
Oracle proposes to pay $9.50 per share for Sun's common stock.
Oracle won't have to finance much, if anything, to acquire Sun. The transaction nets out to about $5.6 billion after Sun's liquid assets (an estimated $1.8 billion) are taken into consideration; Oracle has $8.2 billion of its own in cash and cash equivalents.
Lawsuits in a case like this are not unexpected. However, litigation of this kind rarely succeeds, especially when the acquiring company has plenty of cash in the bank to make a smooth transaction, which Oracle certainly does possess.
A court date isn't expected to be made for several weeks.