Oracle Corporation is to buy Sun Microsystems in a deal worth $7.4 billion. The deal comes a fortnight after talks between IBM and Sun collapsed, following IBM’s decision to significantly lower its offer. It will give Oracle access to Sun’s strategically important Java and Solaris technologies, which underpin the Oracle database. Negotiation tip: Try to spread your spend across the new IT supplier landscape of the ‘big four’ of IBM, HP, Oracle and Microsoft to increase competition and to give your leverage at the negotiation table.

News and rumour from the USA sggests that IBM is ready to resume Sun takeover talks. Ten days ago negotiations broke after the two companies supposedly failed to agree on a price and other terms of a proposed acquisition. IBM apparently would go no higher than $7 billion, which Sun saw as under-valuing a business with $2.7 billion reserves in cash and short-term investments. In an indication of what the market is planning should Sun fail to find a buyer, Dell has launched a marketing offensive against the company with a campaign to offer Sun customers “an immediate path from legacy data centres to more open, flexible standards-based technology.” This may well throw up some interesting cost reduction opportunities for canny negotiators; either by swiching from Sun to a lower priced Dell alternative or by using Dell as a threat to encourage Sun to reduce their existing prices. What ever happens, it will be an interesting period ahead for Sun users.

According to US news agencies, takeover talks have broken down between Sun Microsystems and IBM,  with the two companies failing to agree on a price and other terms of an acquisition. Sun’s negotiators have apparently terminated IBM’s exclusivity agreement, opening the company up to merger talks with other parties. Analysts have suggested Japanese server maker Fujistu could make a move, being the largest OEM of Sun’s Solaris operating system. Other potential buyers could include Hewlett-Packard, Cisco or even Dell. Whatever the eventual outcome, Sun finds itself in desperate straits, having lost nearly $1.9 billion in its last two quarters and so far this year cutting headcount by 2,800 employees as it tries to pare down overheads to balance its declining sales revenue. With this developing situation, anyone looking to buy Sun in the next few weeks and months should be careful about what kind of deal they enter into. They should also be wary of any long term contractual commitments that may need to be honoured by any organisation that ends up buying Sun.