Sun Microsystems
MERGERS AND ACQUISITIONS
Master of Science in Finance.
TEACHER: ANTÓNIO BORGES ASSUNÇÃO
CASE 2
Sun Microsystems
6TH MARCH 2014
CASE REVIEW
As Shelton (1988) said strategic fit exists when two companies are able to create value that would be created if they were trying to reach the same goals separately. The IT industry is extremely competitive and companies are always searching for new ideas and new ways to evolve to be constantly one step ahead of its competitors. It also has players that are known all around the world for the quality of their products.
Oracle started then to, over the years, acquire smaller companies, either to continue the development of their core business (database systems) or to be able to enter into new areas that would complement their current offer. On that target screening they found Sun Microsystems. Being already dominant in the software area, Oracle saw the perfect opportunity to expand and enter in the hardware and networking space that already were Sun´s areas of expertise. With this deal Oracle would be able to expand their brand and their clients and, at the same time, acquire new platforms to their portfolio such as Java, MySQL and Solaris.
Oracle’s levered the company’s value with the acquisition of Sun through complementing their software with hardware manufacturing and by doing so they were able to cut production costs, thus making the company more efficient throughout all the value chain. The ultimate result would be reflected on the product’s price, thus benefiting their customers.
Sun Microsystems would then be a good strategic fit for Oracle. The only barrier would be how much Oracle would be willing to pay for all this implicit benefits. IBM was also interested and they needed to act quickly, doing a defensive acquisition. Sun’s price could have its original price pushed way up because of the amount of companies interested.
To know which price Oracle 's should give
Master of Science in Finance.
TEACHER: ANTÓNIO BORGES ASSUNÇÃO
CASE 2
Sun Microsystems
6TH MARCH 2014
CASE REVIEW
As Shelton (1988) said strategic fit exists when two companies are able to create value that would be created if they were trying to reach the same goals separately. The IT industry is extremely competitive and companies are always searching for new ideas and new ways to evolve to be constantly one step ahead of its competitors. It also has players that are known all around the world for the quality of their products.
Oracle started then to, over the years, acquire smaller companies, either to continue the development of their core business (database systems) or to be able to enter into new areas that would complement their current offer. On that target screening they found Sun Microsystems. Being already dominant in the software area, Oracle saw the perfect opportunity to expand and enter in the hardware and networking space that already were Sun´s areas of expertise. With this deal Oracle would be able to expand their brand and their clients and, at the same time, acquire new platforms to their portfolio such as Java, MySQL and Solaris.
Oracle’s levered the company’s value with the acquisition of Sun through complementing their software with hardware manufacturing and by doing so they were able to cut production costs, thus making the company more efficient throughout all the value chain. The ultimate result would be reflected on the product’s price, thus benefiting their customers.
Sun Microsystems would then be a good strategic fit for Oracle. The only barrier would be how much Oracle would be willing to pay for all this implicit benefits. IBM was also interested and they needed to act quickly, doing a defensive acquisition. Sun’s price could have its original price pushed way up because of the amount of companies interested.
To know which price Oracle 's should give