IBM-Sun deal nears finish line; Antitrust worries just starting

IBM's acquisition of Sun Microsystems is reportedly closer to becoming reality---at a lower price---but antitrust concerns loom over the deal. 

The Wall Street Journal and New York Times are reporting that IBM will pay about $9.50 a share for Sun, about a buck lower than Sun expected for a to

tal price tag of $7 billion or so. In return for that lower price Sun is demanding that IBM will fight to complete the deal if antitrust regulators try to stop the acquisition. 

These reports (Techmeme) are notable because they show how Sun is in a really tight spot. The company only has IBM as a potential buyer and if Big Blue were to walk away Sun's decline could accelerate. Yahoo found itself in a similar situation with Microsoft. 

Meanwhile, an antitrust spat could be interesting. IBM and Sun combined would have a commanding 65 percent share of the high-end Unix server market and would also dominate tape storage. The rub: Both of those markets are perceived to be in decline. And declining markets usually have a dominant player that's set up to milk those businesses. What would/should regulators do?

Also see: IBM's potential purchase of Sun: Here's why it makes sense

Rest assured that the IBM-Sun merger conference call, which could come Friday, is going to focus on businesses like Java, open source software and cloud computing. Despite regulator concerns, hardware may not be the primary focus of the deal. 

I still think the IBM-Sun deal makes sense, but a deal to sell some of Sun's hardware business wouldn't be surprising either. In any case, Sun apparently wants some assurances that Big Blue will jump through any hoops needed to seal a deal. You can read that to mean that Sun knows its end game is near.