EU regulators object Sun Microsystems take over

After the European regulators formally objected to the plan of take over of the Sun Microsystems Inc. by the Oracle Corporation that is a $7.4 billion sale to the latter,on Tuesday,  the Fitch rating has lowered down its outlook for the Sun Microsystems Inc. from “positive” to “evolving”, on Tuesday.

If the deal falls apart, the Fitch is likely to knock down Sun’s rating by 2 scores as the company already has a “BBB-” rating which is a one move above non-investment, or “junk” grade.

The Statement of objections that the Sun received on Monday by the European Commission, has clear statements by the Commission, of its concern about the possible harm to the competition in the database market if the Oracle’s $7.4 billion takeover becomes successful.

The Commission’s formal objection which says that it could finally prevent Oracle Corp. from reaching its proposed acquisition could surely be a bad news for Sun Microsystems Inc., as noted by the Fitch.

The organization has already been struggling, and the uncertainty about the deal, which both the companies had hoped would close this summer, has already wounded Sun, as it has lost its market share to its rivals like IBM Corporation and Hewlett-Packard Co., losing about $120 million, in the most recent quarter, that ended on September 27th. So this depends mostly on how the Sun clears its regulatory tests. And if that is cleared its outlook can return to “positive” rating, added Fitch. The deal has already been cleared in the U.S.

The Sun’s stock was stuck below Oracle’s $9.50 per share offer on the company. On Monday, it edged up 6 cents to $8.30 in extended sharing as Oracle commented on its willingness to fight to keep the transaction in its current form alive. And on Tuesday, in the afternoon trading, the shares of Sun fell from 7 cents to $8.17.

One comment

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