Blog > US Stocks and Markets > Mergers and Acquisitions: IBM’s bid for Sun (JAVA) good news for Red Hat (RHT) and Satyam (SAY)
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Mergers and Acquisitions: IBM’s bid for Sun (JAVA) good news for Red Hat (RHT) and Satyam (SAY)

Today's Financial News - Posted March 18, 2009

Sun Microsystem (JAVA) rose 80% today on takeover news. Flush with cash, digital giants like IBM (IBM), Cisco (CSCO), Dell (DELL) and Hewlett-Packard (NYSE:HPQ) are poised to swallow some industry stalwards. Who’s next in line for instant shareholder value increases?

by J. Christoph Amberger

Baltimore—TFN: Shares of Sun Microsystems (NASDAQ:JAVA) soared 80% today as news emerged that IBM (NYSE:IBM) is about to acquire the company for $8 billion. And why not: Depressed share valuations have punched back the stock prices of Internet-related companies to levels not seen since the very early days of the Internet. On the other hand, some stalwarts in the industry are still sitting on gobs of cash:

* Dell (NASDAQ:DELL) has more than $9 billion in cash and short-term investments;

* Hewlett-Packard (NYSE:HPQ) has more than $11 billion;

* Cisco (NASDAQ:CSCO) has $4.2 billion in cash plus and $24.6 billion in fixed-income instruments.

One man’s crisis is another man’s opportunity. The total number of tech companies is expected to fall by 40% to 60% as a result of consolidation and natural attrition in the next couple of months. Among possible acquisition targets, we consider Red Hat Inc. (NYSE:RHT),  VMware, Inc. (NYSE:VMW), and Satyam Computer Services Ltd. (NYSE:SAY) top candidates, although Novell, Inc. (NASDAQ:NOVL) certainly is the best bargain right now.

Expect Cisco and H-P to make a move within 12 weeks.

(We’ll be covering this new M&A activity in the TFNeNews, I promise. Sign up below and never miss an alert!)


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Posted by J. Christoph Amberger · Filed Under US Stocks and Markets 

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