Sun’s stock plummeted nearly 23 percent to $6.68 a share in premarket trading, following reports in The New York Times and The Wall Street Journal that the company rejected a formal buyout bid of $9.40 a share or less, and terminated an exclusive negotiating agreement, prompting IBM to withdraw its offer.
Sucks to be Sun Microsystems (JAVA) today. According to a Sanford C. Bernstein analyst, Sun walked away from an offer that was more than double its average share price:
IBM’s offer of $9.40 a share was a 110 percent premium…
Given the size of the premium and the fact that Sun’s board has presided over a decline in the company’s stock price over the last eight years from over $250/share to less than $5 prior to the acquisition talks being leaked, we believe that (Sun) is likely to face significant shareholder unrest, similar to what occurred when Yahoo declined Microsoft’s offer. We expect Sun to issue a public statement detailing its rationale.
Toni Sacconaghi, Sanford C. Bernstein
Two things to say on this…
First, as a young pup back in the late 90’s, I played blackjack with Sun founder Scott McNealy at the Bellagio. I wish I could remember the style he played with so I could make some snarky comment about “knowning when to hold ’em and fold ’em” or his bluffing ability, but it was 21, not poker and besides, I don’t remember. All I can recall is that he was wearing a hockey jersey (I know, weird) and playing way above the average bet at the table (obviously).
Lets see if the shareholder base has any fight left in ’em.
Late Edit: I’m being told by my more tech-savvy readers that Sun owns Java, not Java script. Thanks. To me, the nomenclature of Sun’s Java offerings is not the relevant part of the discussion. The point here is that Sun’s shareholders were done wrong. I have no ax to grind or horse in this race, it simply seems like a repeat of MSFT/YHOO and a crying shame.
Full Story: IBM Walks Away from Sun Micro
Full Disclosure: I have no positons in JAVA or IBM
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