IBM walks away from Sun deal

The Sun ain't gonna shine anymore

IBM has reportedly withdrawn its offer for rival systems supplier Sun Microsystems, as the two sides failed to agree a price.

The New York Times cites three sources close to the deal that said IBM has walked away after failing to convince Sun's board to accept its $7bn (£4.7bn) offer.

IBM is believed to have made an initial offer for Sun worth $9.55 per share, but subsequently cut that to $9.40, after its lawyers pored over the details.

Any deal could have been subject to a potentially lengthy anti-trust review. Both Sun and IBM compete in the enterprise server market, and competition regulators may have been concerned had IBM acquired ownership of Java.

Failure to secure a deal will raise questions over the future of Sun. By entering into negotiations, its board has potentially signalled a lack of faith in its ability to operate as a standalone company.

Over the years Sun has developed some industry-changing technology, said Simon Holloway, practice leader at analyst Bloor Research: "But they did know how to exploit it."