Sun investors to vote on Oracle on July 16

Tune in on July 16 to see whether Oracle actually becomes the new parent of Sun Microsystems.

Sun's board of directors has set up a special shareholder meeting for that date to vote on the proposed merger with Oracle, according to a statement Sun released Monday. Sun's board, which has already okayed the merger, is urging stockholders to approve the deal--a majority vote is needed to push it through.

Shareholders can vote on the merger in person, at Sun's Web site, or through a proxy card received by mail. Assuming approval, it expects the merger to be completed over the summer.

The company has sent a proxy statement dated June 8 with full disclosure to all shareholders. Besides providing details on the vote and stockholder meeting, the statement reveals other interesting tidbits.

Severance pay
No details have been revealed about what will become of Sun management, though the proxy statement does discuss potential severance packages for Chairman Scott McNealy, President and CEO Jonathan Schwartz, and other high-ranking execs. If termination were to occur in August, McNealy would receive $9.5 million in total compensation, including severance, health benefits, and equity, while Schwartz would walk away with $12 million.

The courtship of Sun
The proxy statement also reveals blow-by-blow details of the battle to buy Sun, with other suitors besides Oracle in the mix. IBM had been widely rumored as a likely buyer of Sun, but the proxy material doesn't mention any suitors by name.

On November 6, 2008, the CEO of a Sun competitor, known in the statement as "Party A," approached Schwartz about a possible business combination. After initial discussions with Party A, Sun started shopping for other potential buyers, including "Party B." Sun continued its discussion with Party A, entering into a confidentiality agreement and permitting Party A to investigate Sun's finances.

By late December, Sun was serious enough about a potential merger to hire Credit Suisse as its financial adviser to help it consider different offers. On January 28, Party A proposed acquiring Sun for $8.40 to $8.70 a share. In early February, Sun discussed the proposal with its legal and financial advisers.

But by February 12, 2009, Party B was back in the picture as Sun resumed discussions with its other suitor, signing a confidentiality agreement and permitting due diligence for Party B to check into Sun's finances. On February 20, Party A boosted its offer for Sun to $10 a share, predicated on exclusive negotiations between the two companies.

By February 23, Oracle had entered the picture. McNealy spoke with Oracle CEO Larry Ellison about a possible transaction. Between February 22 and 26, Sun's board was busy setting up special meetings to discuss the proposal from Party A and the interest from Party B and from Oracle. Further conversations were held between McNealy and Ellison. But by February 26, Sun had decided to enter into an exclusive agreement with Party A and end discussions with all other companies.

Over the next month, Sun held lengthy meetings with Party A. But negotiations dragged on, and there was talk of ending the exclusivity agreement with Party A and resuming conversations with Party B and with Oracle. On March 12, Oracle sent Sun's board a letter expressing an interest in a limited takeover of certain Sun assets. However, Sun management opted to continue its agreement with Party A.

On March 29, Party A reduced its bid to $9.40 a share. After review, Sun management was worried about Party A's offer for various reasons, especially antitrust issues. Concerned about the price and terms of the agreement, Sun decided on April 4 to reject the offer from Party A.

By April 6, the board was back discussing potential deals with Party B and with Oracle. But on April 8, Party A jumped back into the ring, still interested in Sun. Now the board was at work again to discuss offers from all three companies.

By April 10, Sun and Oracle had entered into a confidentiality agreement, and the two met soon thereafter to hash out a possible transaction. On April 17, Party B opted out of the race. On the same day, Oracle sent Sun a draft merger proposal for $9.50 a share.

After the price per share became a sticking point between Sun and Party A, Sun's management finally approved a merger agreement with Oracle on April 19.

Now it's in the hands of the stockholders.

Author: Lance Whitney @ http://news.cnet.com

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With Virtual Iron, Oracle Bought a Big Loss

Did Oracle recently buy Virtual Iron, a maker of virtualization software, for its talent? Perhaps so, because the company certainly hasn’t been selling a lot of software, according to financial documents obtained by The Times.

The documents indicate that Virtual Iron had just $3.4 million in revenue last year. That’s a big rise over $1.5 million in 2007. But Virtual Iron sure spent a lot of money to get that revenue.

Its sales, marketing, research, development and administrative costs were $17.7 million last year, up from $13.6 million in 2007. So, in 2008, Virtual Iron posted a loss of $15.3 million.

Last January, Virtual Iron raised $20 million, hiking its total funding up to $65 million. Highland Capital Partners, Matrix Partners, Goldman Sachs, Intel Capital and SAP Ventures all funded the company.

Oracle has declined to reveal how much it paid for Virtual Iron, but with the revenue in 2008 sitting so low, it seems pretty clear that the investors lost out on this start-up — that is, unless Oracle was willing to pay many, many times Virtual Iron’s revenue. (The company did report $17 million in cash and equivalents in 2008.)

With the addition of Virtual Iron, Oracle has a crowded stable of virtualization products. Virtual Iron’s software will join Oracle’s own virtualization software, and soon enough Oracle will inherit even more virtualization software when it completes the purchase of Sun Microsystems.

The funny thing about these various software products is that they’re all based on the open source Xen project. So Oracle will own three products with the same guts.

Each company has made its own tweaks to Xen, leading to some differences among the products. Wim Coekaerts, Oracle’s vice president of Linux and virtualization engineering, said last week that the addition of Virtual Iron would let Oracle’s customers “more dynamically manage their server capacity and optimize their power consumption.”

Even with three sets of virtualization software on its side, Oracle has a long way to go to catch up with the market leader, VMware. Last year, VMware posted revenue of $1.9 billion.

Author: Ashlee Vance @ bits.blogs.nytimes.com

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Swiss America’s Cup Team Says Oracle Employed a Spy in Europe

The tradition of spying in the America’s Cup is apparently alive and well. Jean Antoine Bonnaveau, an employee of the American team BMW Oracle Racing, is under investigation by the Swiss and French police for taking photographs last month at Alinghi’s base in Villeneuve, Switzerland.

The investigation became public when the Swiss yacht club that Alinghi represents, the Société Nautique de Genève, included a copy of a police report concerning Bonnaveau with an affidavit it filed this week. The affidavit was submitted for a hearing on Thursday at the Supreme Court of the State of New York related to the still-unresolved terms of the next Cup.

“A spy from BMW Oracle was spotted trying to gather illegal information from the Alinghi boatyard in Villeneuve,” Paco Latorre, a spokesman for Alinghi, said in a telephone interview.

The BMW Oracle spokesman Tom Ehman played down the incident and accused the Swiss team of engaging in diversionary tactics.

“Société Nautique de Genève (S.N.G.) is once again trying to avoid the Court’s clear judgment by making trumped-up allegations that have nothing to do with the matter at hand,” Ehman said in a statement. “Legal observation of competitors is common practice in the America’s Cup and other major sporting events.”

The Cup, the most visible event in sailing, has long generated controversy and legal fees. Spying and claims of nautical espionage are not new. During the 1992 Cup in San Diego, Bill Koch, the owner of the victorious America, employed scuba divers to examine competitors’ hull designs. During the 2003 edition, the American challenger OneWorld was penalized for being in possession of proprietary design information that belonged to rival syndicates.

Syndicates routinely use chase boats to examine other teams’ yachts and tactics during training. When BMW Oracle launched its new 90-foot trimaran last year in Anacortes, Wash., Ehman said there were Alinghi employees on site observing and analyzing the yacht. He added that Alinghi representatives were also present when the trimaran was based in San Diego.

But Latorre said Bonnaveau’s behavior was of a more invasive nature than usual in Villeneuve, the Lake Geneva town where Alinghi is building its new multihull yacht behind closed doors. Bonnaveau is suspected of violating Swiss privacy laws.

“It should not be confused with what Alinghi did in San Diego,” Latorre said. “Observing and watching a boat that is public and that has been launched in front of everybody cannot be put in the same category as illegal espionage.”

Alinghi and BMW Oracle, the team based in San Francisco and owned by the American billionaire Larry Ellison, have been engaged in a protracted legal dispute since shortly after Alinghi successfully defended the Cup in June 2007 in Valencia, Spain.

Last month, after a series of appeals, BMW Oracle won the right to become the challenger of record for the next Cup. The decision dislodged the Spanish yacht club Club Nautico de Vela, which had been Alinghi’s initial choice to be its principal challenger.

But Alinghi and BMW Oracle officials are still haggling over the particulars of the competition, including the dates, which is the reason for Thursday’s hearing in New York.

After BMW Oracle’s victory in court last month, negotiations between the teams about the possibility of staging a traditional multiple-challenger event using monohulls off Valencia quickly broke down. They are now all but certain to face each other in massive multihull yachts in a best-of-three series next year.

BMW Oracle officials say that the next Cup should respect the latest court ruling and be held in February 2010, 10 months after the final appeal was resolved. But Alinghi officials have insisted on May 2010, arguing that the Cup’s governing document, the Deed of Gift, does not permit racing in the Northern Hemisphere before May 1.

Bonnaveau, a 50-year-old Frenchman, is suspected of beingin Villeneuve on April 28 and 29 attempting to gather information on Alinghi’s multihull in progress. Alinghi officials videotaped him and his vehicle when they spotted him, and he was later questioned by the French and Swiss police in the southern French city of Nîmes.

In the police report — a transcript of a hearing May 1 — Bonnaveau said that he worked as a sail analyst for BMW Oracle at a salary of $13,600 per month. He said that he had been sent to Villeneuve by BMW Oracle’s racing team designer, Manolo Ruiz de Elvira, and that such information-gathering missions were “routine” in the Cup world.

“I was officially authorized by my company to carry out this reconnaissance,” Bonnaveau said in the transcript. “In fact, I am part of the design team, but the entire staff can provide useful information, particularly on opposing teams. We call that a ‘recon cell’ for reconnaissance.”

Author: CHRISTOPHER CLAREY @ www.nytimes.com

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