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Sun to Acquire StorageTek for $4.1B

In early-morning bombshell, Sun outlines plan to 'juice' channel sales by buying tape partner

Sun Microsystems Inc. (Nasdaq: SUNW) this morning announced plans to buy Storage Technology Corp. (StorageTek) (NYSE: STK) for $4.1 billion in cash by the end of this summer.

Sun hopes to leverage StorageTek's sales channels, which encompass mainframe storage customers as well as buyers in vertical markets like government, financial services, telecommunications, and healthcare, to expand Sun's storage footprint and thereby help build its overall data center business. Sun sees its future as being a provider of "heterogeneous, open systems" -- a future tied to the success of storage networking products, including StorageTek's tape libraries.

"We... are confident that the combined enterprise... will significantly expand our customer base and opportunities for growth," said Sun CEO Scott McNealy in a prepared statement. And Jonathan Schwartz, Sun's COO, referred to Sun's goal of offering "one architecture to build applications and store data."

The companies were rumored to be talking about a merger for years, but recent scuttlebutt had the talks stymied when Sun balked during due diligence. Now, that's water under the bridge. Pending regulatory approvals, Sun will shell out about $37 per share to close the deal by the end of the summer or early fall 2005.

An integration team will oversee the blending of StorageTek's roughly 7,100 employees into the 32,000-odd Sun population. Mark Canepa, executive VP of Sun's Network Storage Products Group, will be in charge, though execs at both companies aren't being specific about how the ultimate grouping will look, or who will or won't be staying on.

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