Report: IBM in Talks to Buy Sun Microsystems for $6.5B

3/18/09

Big Blue may become even bigger in the Boston area. IBM is in discussions to acquire Sun Microsystems, a move that would strengthen IBM’s Web presence and add to its server and data storage businesses, the Wall Street Journal reports this morning, citing unnamed sources with knowledge of the talks. Both IBM (NSYE:IBM) and Sun (NASDAQ:JAVA) have significant operations in Massachusetts.

The combination of the two companies—which the WSJ story stressed may not happen—makes sense on at least a couple of fronts. Both companies are leaders in the development of open-source software, and, as the Journal story notes, the firms provide servers and other technologies for large businesses that aren’t dependent on Microsoft’s (NASDAQ:MSFT) Windows software or Intel’s computer chips. Sources told the WSJ that IBM could pay $6.5 billion in cash to scoop up Sun.

It’s too early to tell how Armonk, NY-based IBM’s potential buyout of Sun would affect the firms’ operations in Massachusetts. Sun, headquartered in Palo Alto, CA, has a research and development operation north of Boston in Burlington, MA, and IBM’s purchase of the company could complicate Big Blue’s plans to consolidate the dozen-odd operations it has in the Boston area at renovated campuses in Littleton and Westford, MA, by sometime in 2010. (Wade wrote last month that Big Blue has 5,000 employees in the area and is undertaking the massive consolidation effort after a spate of acquisitions in Massachusetts.)

We’ll be following how buyout talks between IBM and Sun unfold and the potential impact on New England. Stay tuned.

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