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Sun proxy details its dating game

Three suitors and wacky questions

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Sun negotiated with IBM from February 26 through April 4, putting together a draft definitive agreement and going over issues relating to antitrust regulations and commitment levels on the part of IBM to see the deal through.

On March 12, Oracle sent a letter to Sun's board suggesting that Oracle buy certain (and unspecified) software assets from Sun, take a minority interest in the company, and doing some strategic relationships to help shore up Sun. Sun's board talked about this offer in a meeting on March 16, but decided to keep working on the IBM deal instead and did not respond to Oracle's offer. Whoops.

On March 18, the Journal story broke about IBM wanting to shell out $10 to $11 per share for Sun, right smack dab on the opening day of the CommunityOne East event hosted by Sun. While all the talk about the IBM-Sun deal swirled around, IBM took a hard look at its options and decided to drop its offer to $9.40 a share and made some other conditions to the deal (which presumably annoyed Sun and may, as El Reg has reported, have had to do with golden parachutes for McNealy and Schwartz).

On April 4, IBM squeezed Sun a little harder, offering one deal for $9.40 a share with a higher level of commitment to see the deal through than another, which was worth $9.10 a share and had no such commitments. Sun's board shot down both deals, terminated the exclusivity deal with IBM, and weighed its options. Its options at this point pretty much being Oracle and Party B, which got rolling with its due diligence on April 9 and Oracle entered into a confidentiality agreement the following day and called out its own bean counters and lawyers.

Sun and IBM continued talk after a cooling off period, and IBM told Sun that if it could not agree to a deal by April 20, that was it. IBM kept its two deals on the table, and Sun didn't accept either price, but kept talking.

Credit Suisse stepped in on April 16 and gave Oracle and Party B until April 17 to make an offer. That day, Party B bowed out of any deal and Oracle said it would make an offer of $9.50 per share.

The next day, as the lawyers were all talking, Schwartz called Safra Catz, co-president of Oracle, and asked for more money. This was not a very good bargaining position, with IBM offering $9.10 a share and Party B moving on, and it is hard to imagine that she didn't laugh.

Catz merely said, according to the proxy statement, that a higher price "would not be acceptable to Oracle." Or, necessary, given the other deal on the table and the lack of other deals or options.

On April 19, Sun's board asked IBM what its price was for Sun, and Big Blue said $9.10 per share. IBM's lawyers sent over the deal, Sun's board tossed it on the table and that afternoon, it approved the Oracle deal and broke off talks with Big Blue.

Dance over. And now a Delaware corporation called Soda Acquisition, owned by Oracle, is doing the deal. Sun will be a wholly owned subsidiary of Oracle when the deal is done, according to the proxy. How long it maintains its separate identity remains to be seen. ®

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