Oracle, Sun Deal Approved By Justice Dept. - InformationWeek

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8/21/2009
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Oracle, Sun Deal Approved By Justice Dept.

The Justice Department ruling came earlier than expected, a possible response to Sun Microsystems' declining revenues in a steep recession.

Oracle announced late Thursday that the U.S. Department of Justice has approved its proposed acquisition of Sun Microsystems.

The European Commission has still to rule on the deal, a step that will be required before it can close. That body has indicated it will issue an initial opinion on Sept. 3, according to the Wall Street Journal. It may OK the deal at that time or launch a four-month probe of it.

Oracle had originally hoped to complete the acquisition in August. Sun shareholders on July 16 approved the $5.6 billion deal by a wide enough margin for the Justice Department to terminate the waiting period normally required under the Hart-Scott-Rodino Act. Oracle announced the planned acquisition in April.

The Justice Department ruling came earlier than expected, a possible response to Sun's declining revenues and precarious business position in a steep recession, as the required reviews proceeded.

The antitrust unit of the department announced a second round of review into the ramifications of the deal in June. That round was completed promptly for DOJ's approval to be announced Thursday.

One antitrust concern was that Oracle will become the owner of the widely used Java programming language. Oracle's database and middleware competitors, such as IBM and Red Hat, rely on Java.

Oracle will also acquire the Solaris operating system, a portfolio of Java middleware and the open source database system, MySQL, in the acquisition.

Burton Group analyst Nik Simpson said in a July Webcast that Sun's hardware business was "between a rock and hard place." Rock, noting it was the code name for Sun's next generation of UltraSparc servers. UltraSparc sales "never really recovered from the Dotcom bust," he said during the Webcast.

In the most recent quarter, hardware sales were down 33%. Sun's design project for its next generation UltraSparc architecture, code named "Rock," has been cancelled, according to numerous reports. "That leaves them without a next-generation architecture," Simpson said.

As a result, HP and IBM have been making offers aimed squarely at migrating UltraSparc server users to their own brands of hardware.

The U.S. Department of Justice has approved Oracle's acquisition of Java and other assets in its $5.6 billion acquisition of Sun Microsystems.


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