IBM has failed to reach an agreement to buy Sun
Microsystems, despite reports last week thata deal was expected within
days.
Talks between the two companies have run into "significant
obstacles" according to the
Financial Times, and the
New York Times says IBM withdrew its $7bn bid for Sun on
Sunday.
Sun's high-end hardware business has struggled due to the
economic crisis and last month the company
announced 1,500 jobs cuts as part of its plans to slash
costs.
IBM and Sun have been in merger talks for several weeks over a
deal, which last week was valued at $9.55 a share.
After a legal review of potential problem, such as Sun's
contracts with employees and IBM competitors, IBM is said to have
reduced the offer to $9.40 at the weekend.
IBM withdrew the offer after Sun's board is said to have balked
at the deal and insisted on certain guarantees that sources close
to the talks said IBM considered onerous.
It is not clear whether the collapse in talks is permanent or
temporary, but it could open the way for Sun to look for other
buyers, although analysts say this may prove to be difficult.
If the deal went ahead, it would enable IBM to become the
dominant supplier of Unix servers and strengthen its position
against rivals Hewlett-Packard and Oracle in the database software
sector.