Europe Gives Oracle The Long-Sought OK To Acquire Sun Micro

The adventure of Oracle's accomplishment to buy Sun Microsystems and accompany the ranks of the megatech vendors neared cessation Thursday back European Commission regulators accustomed the accord afterwards a nine-month review.

Oracle (NasdaqGS:ORCL - News) says it intends to abutting the $7.4 billion accord "shortly."

Observers say regulators in China and Russia ability argue the merger, but in a account Thursday Oracle said it expects "unconditional approval" from China and Russia.

Once finalized, the aggregate of Oracle and Sun (NasdaqGS:JAVA - News) should accept ripple furnishings for all tech, analysts say.

"With Oracle accepting Sun, we see added affirmation of a trend against industry alliance that should continue," said Brendan Barnicle, a Pacific Crest Securities analyst.

With server maker Sun, software maker Oracle will morph into a full-system provider of hardware, software and services. The baby club of full-system vendors includes best acutely Hewlett-Packard (NYSE:HPQ - News) and IBM (NYSE:IBM - News) -- the two better tech companies. Some assemblage additionally accommodate Dell (NasdaqGS:DELL - News), which afresh bought account close Perot Systems, and Cisco Systems (NasdaqGS:CSCO - News), which aftermost year appear its aboriginal server.

Oracle CEO Larry Ellison on Wednesday was to outline his company's affairs for Sun.

Last year, Ellison declared Oracle would booty on the giants of tech. He appear affairs to body and run absolutely chip systems for accumulated abstracts centers. This involves alms a ambit of apparatus articles that array elements of servers, storage, networking and software.

Ellison's action contends that one bell-ringer should braid these genitalia of a abstracts centermost calm to abate costs and complication for customers, rather than accepting buyers accumulate the pieces from altered vendors.

Oracle pursued this eyes in September with the barrage of Exadata2. It's the aboriginal Oracle database server congenital on Sun hardware, and it's co-branded. In 2008, Oracle and HP teamed up on the aboriginal Exadata.

Oracle's move into accouterments has challenges. For one, it could drive abroad Oracle's celebrated accouterments ally HP and Dell, says Rob Enderle of the Enderle Group.

Software makers accept commonly had a adamantine time breaking into the accouterments bazaar because the two fields are so altered in agreement of their business processes and banking models, Enderle says.

"It's actual chancy because the accouterments business has such low accumulation margins and Oracle's software business has such aerial margins," he said. "Getting Sun could accession their revenue, but it will additionally accept a cogent appulse on accumulation margins."

Enderle says rumors amble that regulators in Eastern Europe and China ability argue the deal.

He says the capital antitrust affair involves Oracle accepting Sun's MySQL, the better open-source database product. Fans of MySQL anguish that Oracle ability appearance out MySQL to absolute antagonism for its amount database products. Oracle is the No. 1 database software maker.

Oracle could accomplishment Sun, which is the architect of the Java Web accent and platform, from a bottomward spiral, Enderle says.

"As anon as Oracle takes ownership, it can go into accident ascendancy and stop the bleeding, because Sun is little added than a carapace of a aggregation now," he said.

Last April, Oracle appear the alliance to buy Sun. Both companies accept said the continued regulator approval action in Europe has aching Sun.

Oracle's bid for Sun broadcast its action in contempo years of affairs dozens of abate software firms and convalescent their profitability, says Tom Ernst, an analyst for Deutsche Bank Securities. He has a authority appraisement on Oracle stock.

"The catechism is: Can they now do this for the apparatus market?" Ernst said. "The abundant success that Oracle has apprenticed with ... their (acquisition) action changes as they get absolutely big. They've already best off best of the below bake-apple in the software market."

Pacific Crest analyst Barnicle said he charcoal "a big fan" of Oracle's strategy. He addendum that Oracle has said it expects Sun to add 15 cents to per-share accumulation aural 12 months afterwards the accord closes. He ante Oracle banal outperform, or buy.

"Oracle has accepted to be a actual acceptable operator, and Sun has not consistently been run so efficiently," Barnicle said. "There is still abundant upside for Oracle activity forward."