Update: Sun to buy SeeBeyond for $387 million

Purchase aims to boost Sun's business integration software presence

Sun Microsystems is to purchase SeeBeyond Technology for $387 million in cash in a move to boost Sun's presence in the business integration software arena, the companies announced Tuesday. Sun is likely to buy further companies in this market, according to company executives.

Sun has been placing a lot of emphasis on the SOA (service oriented architecture) development model and hopes the acquisition of SeeBeyond will fill out its portfolio of products for developing, deploying and managing SOAs and other enterprise applications, according to company executives speaking on a Tuesday morning conference call.

Scott McNealy, Sun's chairman and chief executive officer, said on the call that his company had been looking around for a suitable acquisition to allow Sun to "go for the $5 billion enterprise application" market space. "It'll be a $2 billion market going forward," boasted Sun President and Chief Operating Officer Jonathan Schwartz. "We plan on taking half of it."

Sun is likely to make other middleware acquisitions. "We're certainly still quite flush with cash" to make further purchases, McNealy said. "Stay tuned as we continue to redefine this [strategy]."

SeeBeyond's Integrated Composite Application Network (ICAN) software suite runs natively on Java 2 Platform, Enterprise Edition (J2EE). ICAN will become the sixth piece of Sun's Java Enterprise System and will be known as the Sun Java System Integration Suite, according to McNealy.

Under the terms of the deal, SeeBeyond shareholders will receive $4.25 per share in cash for each SeeBeyond share, according to Stephen McGowan, Sun's chief financial officer and executive vice president of corporate resources. The $387 million purchase represents "a 29.6 percent premium over yesterday's closing price [for SeeBeyond]," he said.

SeeBeyond, of Monrovia, California, has 2,000 customers worldwide, such as Blue Cross Blue Shield of Massachusetts, General Motors, Hertz, Hewlett-Packard, and Pfizer. Sun and SeeBeyond claimed there is little overlap in their respective product lines.

The purchase is expected to be closed in "early fall" of this year, suggesting September, subject to approval from regulators and SeeBeyond shareholders.

Adding SeeBeyond to its arsenal is another indication of how Sun is fundamentally changing its focus. "We're not the hot chips company we were before," McNealy said. "We've got hot chips, but they're not going to be the lead warhead, if you will."

McNealy hopes that the addition of SeeBeyond personnel will help Sun in its ongoing interoperability efforts with Microsoft. "This gives us a whole new team to facilitate Windows' .Net and Java interoperability," he said. "[The SeeBeyond purchase] will make the conversation even more fruitful."

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