Sun Rises With StorageTek
Sun Microsystems is buying Storage Technology Corporation or StorageTek for $37 per share in cash, adding up to about $4.1 billion. The acquisition has been approved by the boards of both companies.
The transaction includes the assumption of StorageTek’s employee stock options. Sun expects the transaction to be accretive to non-GAAP earnings in the first 12 months following the closing.
“Sun’s technical and financial strength puts us in a great position to act as a consolidator in the IT industry. This acquisition is part of an ongoing strategy to respond to customers seeking to rationalize their datacenter purchases — to free up time and dollars to focus on compliance, architectural integration, security and, of course, the bottom line,” said Sun’s Chairman and CEO Scott McNealy.
“With this announcement, Sun solidifies its leadership position, with the highest volume computing platforms, the most comprehensive data and identity management solutions, and when combined with StorageTek, an unmatched ability to earn the confidence of customers as they develop, deploy and manage information assets throughout their entire lifecycle,” added McNealy
In the past four quarters, the two companies collectively had total annual revenues of more than $13 billion. As Bloomberg News says, “The purchase will step up competition with International Business Machines Corp. and storage companies such as EMC Corp. as Sun Chief Executive Scott McNealy seeks to regain market share and stem losses.”
“Together, the two companies enjoy financial strength, a complete systems offering, an impressive list of blue chip customers and global reach. We look forward to welcoming the StorageTek workforce into the Sun organization and are confident that the combined enterprise, with its broader range of products, services and capabilities will significantly expand our customer base and opportunities for growth,” added McNealy.
Following completion of the proposed transaction, which is expected to occur in late Summer/early Fall 2005, StorageTek will become fully integrated within Sun’s organization. Completion of the transaction is subject to regulatory approval, StorageTek shareholder approval and other customary closing conditions.
In the meantime, a joint team with representatives of both companies will develop integration plans that build upon the technological, product and cultural synergies and the best business and product development practices of both companies.
StorageTek shares increased $5.62, or 18%, to $36.85 in pre-market trading today, while Sun shares climbed 18 cents to $4.08. Yesterday, they closed at $3.90.