Sun's mystery suitor (HP) and how it'll come back into play
Sun Microsystems on Tuesday detailed a mystery suitor, reportedly HP, that was in the running to acquire the company but got cold feet.
In a filing with the Securities and Exchange Commission, Sun detailed the blow-by-blow account on how it wound up being acquired by Oracle. The history of Party A, also known as IBM, is well known. IBM and Sun got into the due diligence phase and then Big Blue dropped out based on price and regulatory concerns.
Enter the mystery suitor, which the New York Times identifies as HP. Let's pick up where IBM and Sun were haggling:
During this period, our management, at the direction of our board, approached the management of Party B (HP) and certain other parties, to explore their interest in a possible transaction with us. Party B indicated that it was interested in exploring a transaction, but that pursuing a transaction in the near term was not optimal for Party B at that time. Our management and advisors also approached or were approached by other parties during the first quarter of 2009, but except in the case of Party A, Party B and Oracle, no meaningful process for exploration of a possible transaction evolved from any of these discussions.
The Sun deal wasn't optimal for HP because it was integrating the EDS deal. Later, HP became a little more interested:
On February 12, 2009, (CEO Jonathan) Schwartz, at the direction of and in consultation with the Committee, spoke with the Chief Executive Officer of Party B about a possible strategic transaction. Following this conversation, we and our representatives held several discussions with Party B and on February 18, 2009, we entered into a confidentiality agreement with Party B, at which point Party B commenced its due diligence investigations of the company.
Ultimately, Sun wound up with Oracle. However, don't be surprised if HP re-enters the picture again. Despite Oracle's contention that it will keep Sun's hardware business going, it's a bit hard to believe that Larry Ellison will keep around the commodity server and storage businesses. HP could easily swoop in and buy some of Sun's businesses just for market share. HP, which is already tight with Oracle, would be a natural outlet for Sun gear that doesn't fit with Ellison's plan for IT domination.