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Oracle and Sun

I’m sure this made Larry’s day:

The European Commission has opened an in-depth investigation under the EU Merger Regulation into the planned acquisition of US hardware and software vendor Sun Microsystems by Oracle Corporation, a US database and application software company. The Commission”™s initial market investigation indicated that the proposed acquisition would raise serious doubts as to its compatibility with the Single Market because of competition concerns on the market for databases. The decision to open an in-depth inquiry does not prejudge the final result of the investigation. The Commission now has 90 working days, until 19 January 2010, to take a final decision on whether the concentration would significantly impede effective competition within the European Economic Area (EEA) or a substantial part of it.

Via.

The area of concern is Sun’s rather odd acquisition of MySQL, an open-source database product. The details behind the EU case can be found here.

I never understood the driver for Sun to get into the open-source database space. I also did not think that it would become a point of contention in a merger scenario.

Sun’s first-quarter results showed a decline of 25 per cent in revenue. And shares in the company are trading well below Oracle’s takeover offer which suggests that investors are worried that the takeover may be in trouble.

Larry Ellison confirmed that  all of the uncertainty around the deal is costing Sun about $100 million US a month. The company has been forced to lay off thousands in a restructuring plan as a result of a mass exodus of Sun customers.

The European roadblock, significant migration of customers, mass firings and dwindling revenue make it increasingly unlikely that Oracle will ever achieve its stated investment goals with the $7.5 billion deal.

Oops.

Of course, there is always another point of view.