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    Oracle-Sun Merger Discussion

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    Oracle-Sun Merger

    Technology giants Oracle recently announced their intention to purchase Sun Microsystems for over seven billionaires. It is not clear if the merger will go through - it still has various regulatory hurdles to cross but perhaps by the time you are completing this assignment the merger will have already gone through (or have been denied by regulators). Regardless, the focus should be on the potential of this largescale merger between Oracle and Sun.

    As you know from reading the material in the background materials, mergers can bring about great rewards but also can bring great risks and pitfalls. For this assignment, do some research concerning the arguments both for and against such a merger from a financial perspective. For this module we are not so concerned with how consumers may fair, as this is an issue for the government to consider if they have to approve this merger. Instead you are considering this from the point of view of whether or not such a merger would be a profitable undertaking that would add value to the shareholders of both corporations.

    There is a huge amount of articles on this potential merger, but here is one link to get you started:


    But do not limit yourself to this article. Use Proquest, EbscoWeb, and other sources in the Cyberlibrary. Use various internet search engines such as news.google.com for the latest news on this merger. Look at the webpages for Yahoo and Microsoft. Then write a five page paper answering the following question:

    Do you think a merger between Oracle and SUN would add value to the shareholders of both corporations?

    In your answer, consider the following issues:

    1. The impact on Oracle shareholders

    2. The impact on Sun shareholders

    3. The financial condition of both corporations

    4. Why might Oracle and SUN combined as one company be more profitable than they would if they remain independent?

    5. Potential pitfalls - might the combined entity actually be less profitable than either company operating independently?

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    Solution Preview


    In the computer and information technology industry, several companies are working. Sun Microsystems is one of the multinational companies that are engaged in the business of computers, computer software, consulting and information technology services including workstations, servers, etc. The Sun Microsystems was found in the year 1982 and headquartered in California. It is a global supplier of the technology that supplies network computing model in all over the world (Oracle, 2010). The products and services of the company are quite effective to enhance the network power of the most markets in the world.

    Oracle Corporation is also a multinational corporation that is engaged in software products and database management system to its customers. It is a technology giant in the computer industry. The management of Oracle recently announced its intention to purchase Sun Microsystems (Ferguson, Prince & Taft, 2008). At April 20, 2009, both the companies have entered in a definitive agreement in which Oracle will pay $9.50 per share in cash to the stockholders of Sun Microsystems to acquire the business. The total value of transaction is about to $7.4 billion. The net amount would be $5.6 billion including cash and debt position of Sun.

    The acquisition of Sun would be beneficial for Oracle as it would be helpful to combine the best software companies in the industry. The resources and technology used by Sun now would be used by Oracle that causes an increase in its organizational efficiency. It would also be beneficial for the company to increase its market share as acquisition would be beneficial for the customers as system integration cost will be reduced and performance reliability and security of the network would go up (Oracle, 2010). Before the acquisition both companies are known as the industry pioneer were also the partners from more than 20 years. The acquisition is the result of their long term relationship in order to face the increasing competition in technology industry.

    Value for Shareholders of both Corporations

    Since the acquisition between two giant and pioneer companies has placed it is essential to analyze the impact of merger on the shareholders' value of both the companies. The management of both the companies is quite sure for the success of merger and for the increase in the profitability of both companies. According the management of oracle the acquisition would be beneficial for the customers, partners, developers and employees of the Sun. It is because; Oracle has leading position in introducing innovation in enterprise software while Sun has a leading software Java and also a pioneer in the enterprise computing (Oracle, 2010). The integrated efforts of both the companies would create value for the customers.

    Oracle has potential to engineer an integrated system application that would be beneficial to fit the pieces in order to enhance the working of the organization. It would cause an increase ...

    Solution Summary

    This solution provides background information on the two companies, identifies value for shareholders of both corporations, the impact of a merger on both Sun and Oracle's shareholders, the financial condition of both corporations, the potential upside in profitability and potential pitfalls of the merger and a conclusion. This solution is in essay-format and provided in an attached Word document in 1668 words with seven references.