The US Department of Justice has decided to extend its investigation into Oracle's proposed acquisition of Sun, according to a brief statement put out late on Friday.
The Justice Department's 30-day window for looking into the US$7.4bn deal was set to expire Friday. Instead of approving the acquisition, the Justice Department informed Oracle that it is extending that deadline, according to The Wall Street Journal. However, it is likely that the move simply means final details are being ironed out before the Justice department will give the acquisition its stamp of approval.
The news did not change Oracle's optimism that the deal will be approved.
"We've had a very good dialogue with the Department of Justice and we were almost able to resolve everything before the Second Request deadline," said Dan Wall, an attorney with Latham & Watkins who counsels Oracle. "All that's left is one narrow issue about the way rights to Java are licensed that is never going to get in the way of the deal. I fully expect that the investigation will end soon and not delay the closing of the deal this summer."
The acquisition was announced on 20 April, shortly after Sun rejected a buyout offer from IBM, causing IBM to withdraw its offer.
Sun investors will vote in a special shareholder meeting scheduled for 16 July on the proposed merger with Oracle. Sun's board, which has already approved the merger, is urging stockholders to approve the deal — a majority vote is needed. It is widely expected to go through, though some Sun shareholders have filed three separate class action lawsuits to block the deal, the company revealed in a filing with the Securities and Exchange Commission in May.
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Alex - 17/07/09
The problem here is that this merger will not create true shareholder value in the long run. Sure, a competitor is eliminated, but there is a reason why they existed in the first place, and that’s not going away. The hardware these companies produce aren’t yet a commodity, IT professionals weigh their purchasing decisions very carefully. There are pros and cons to each of these brands. So, the combined company has to either maintain both product lines in order to keep the benefits of each intact, or carefully merge the brands / product together into a new platform. If they do, it’s just a third brand with its own pros and cons…it just has no competition. How long will that last? Not long if IBM has their way. If both brands / product lines are maintained, where is the synergy? The value of this merger will only be felt for several years, and it’s doubtful they will be able to cover the cost of the deal along with the integration expenses in that time. This is simply a case of an acquisition made out of ego that will eventually erode shareholder value.
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