FONT-SIZE Plus   Neg
Share SHARE

Hardware Stocks Under Pressure On Reports Of Collapse Of IBM-Sun Merger Talks

After trending higher for much of the past month, computer hardware stocks have come under considerable selling pressure in morning trading on Monday. The pullback is largely due to the reported collapse of merger talks between IBM (IBM) and Sun Microsystems (JAVA).

The losses by hardware stocks are contributing to a 6.2 percent loss by the Amex Computer Hardware Index, which is pulling back well off the six-month closing high it set on Friday. Nonetheless, the index remains up more than 40 percent year-to-date.

Sun Microsystems is helping to lead the way lower, with the server and software maker currently down 23.3 percent. Meanwhile, IBM is currently down 1.3 percent after ending Friday's trading at a six-month closing high.

The steep decline by shares of Sun come after media reports said that acquisition talks between IBM and Sun have collapsed, putting the deal at risk of failure.

The reports said that Sun's board rejected a formal acquisition offer by IBM on Saturday, sending a notice terminating Sun's deal to hold talks exclusively with IBM. In response, IBM reportedly withdrew its offer to acquire Sun on Sunday.

Last week, the Wall Street Journal had said that IBM was close to finalizing a deal to acquire Sun for $9.55 per share in cash. The offer was said to be about a dollar per share shy of Sun's earlier expectations.

The Journal noted that Sun agreed to lower its takeover price to between $9 and $10 per share from $10 to $11 on the condition that IBM commits to acquiring it regardless of a government antitrust review.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

comments powered by Disqus