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IBM-Sun deal breaking down, report says

Too little money. Too little commitment

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According to spokespeople for the two companies a report on Sunday evening in the Wall Street Journal, the much-rumored and never-admitted merger talks between IBM and Sun Microsystems appear to have hit an impasse.

No kidding. Huh.

The report posted on Sunday said that Sun's board of directors had rejected a "formal acquisition offer" from IBM on Saturday, which was believed to be worth "$9.40 or below" per share, which works out to around $6.85bn. Sun was also, according to the report, annoyed that IBM would be able to walk away from the acquisition too easily as it was configured in IBM's proposal.

Apparently, Sun has sent back the engagement ring a notice to Big Blue terminating IBM's "agreement for exclusive negotiations." And IBM has subsequently withdrawn its statements of honorable intentions offer to buy Sun. If Sun were pregnant, Pa McNealy would be going over to Pa Palmisano's house with a loaded shotgun and this deal would be done the good, old-fashioned, American way, with a Justice (Department) of the Peace. That's not to say that Sun isn't screwed, particularly after all the merger talks and IBM's having seen, er, all the goods.

Plenty of people think this is a bad deal, particularly for Sun. But that doesn't mean it is dead. The soap opera will no doubt continue, and Rupert Murdoch has a seat right next to the stage to make the most of it. ®

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