$7.4 billion Oracle-Sun deal faces EU antitrust investigation

ByJon Swartz, USA TODAY
September 4, 2009, 2:15 AM

SAN FRANCISCO -- European Union regulators on Thursday launched an antitrust probe of software giant Oracle's orcl proposed $7.4 billion acquisition of Sun Microsystems java, citing "serious concerns" that the deal will suppress competition in the database market.

EU Competition Commissioner Neelie Kroes said regulators need to consider if customers would face fewer choices and higher prices "when the world's biggest proprietary database company proposes to take over the world's leading open-source database company."

EU resistance would be a major stumbling block for the merger, which Oracle hoped to close this summer. It has already received approval from the Justice Department.

The European Commission has until Jan. 19 to make a final decision on the deal.

Oracle and Sun had no comment on Thursday.

Sun shares slid 1.8%, to $9.15 in trading on Thursday. Oracle would pay $9.50 per share if the deal is completed. Oracle shares dropped 1%, to $21.56.

Regulatory scrutiny delays — if not jeopardizes — Oracle's bid to transform itself into a one-stop technology shop like IBM and Hewlett-Packard. In acquiring Sun, Oracle would pick up the world's No. 4 maker of computer servers, which power websites and corporate back offices.

Ironically, Oracle was seen as a safer suitor than IBM, which also bid for Sun. But IBM was viewed as a bigger antitrust risk because its server and data-storage technology overlaps Sun's.

The sheer size of the agreement — the largest in tech this year — and Oracle's potential move into the hardware market requires a "great deal of scrutiny," says Brenon Daly, an M&A analyst at The 451 Group. "It took Oracle two months to negotiate the deal but, four months later, it is still being reviewed."

Nonetheless, Daly expects the accord to eventually be approved.

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