Update: Oracle agrees to buy Sun for $7.4B

Oracle CEO Larry Ellison says Java and Solaris were the two main reasons Oracle purchased Sun

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Oracle also considers Solaris "by far the best Unix technology available in the market," which is why more Oracle databases run on that OS than any other, Ellison said. He said Oracle's enterprise customers running both products will be able to experience new benefits by technical integration of the products.

"We will be able to tightly integrate the Oracle database to some of the unique high-end features of Solaris, engineering them to work together and for the first time to deliver complete, integrated computer systems -- database to disk -- optimized for high performance, improved reliability, enhanced security, easier management and a lower total cost of ownership," Ellison said.

Sun Chairman Scott McNealy, who has shared a stage with Ellison on numerous occasions in the companies' more than 20-year partnership, said Sun and Oracle share many common interests that will make the union a symbiotic one for customers.

"From day one Sun has believed in openness and innovation," he said. "We both believe in the value of R&D, openness, standards, community [and] delivering a complete solution. ... Today marks the next big step in that effort."

Despite his optimism, however, the deal is undoubtedly a personal blow for McNealy, who came up alongside Ellison as a maverick of the technology industry. For years, the two led their companies as the more outspoken of Silicon Valley's executives, shooting barbs at their common enemy Microsoft and even at each other from time to time. Giving up a company he co-founded to Ellison could not have been an easy decision for McNealy.

Ellison said that Oracle tends to integrate acquired companies very quickly into the existing organization, and will do the same with Sun once the deal closes. The deal is subject to regulatory and shareholder approval.

Oracle said the Sun deal should bring the company more revenue in the first year than the company planned for its acquisitions of BEA Systems, PeopleSoft and Siebel combined. Sun should contribute $1.5 billion to Oracle's non-GAAP operating profit in the first year, a number that will increase to more than $2 billion in the second year, the company said.

For Sun, the deal will bring an end to CEO Jonathan Schwartz's efforts to turn the struggling company around. Sun's sales have been declining since their peak during the dot-com boom, as customers turned away from its pricey Unix servers in favor of x86 systems. Sun's share price has also fallen sharply.

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