IBM looking at acquiring Sun Microsystems: WSJ

There are reports that IBM is in talks to acquire Sun Microsystems. The deal is expected to be upwards of USD 6.5 billion. Commenting on the news,

Justin Scheck of the Wall Street Journal said the deal may or may not happen. "I don’t see any reason on the face of it why it shouldn’t work. I am sure, ideally, it is workable," Scheck, however, added.

Here is a verbatim transcript of the exclusive interview with Justin Scheck of Wall Street Journal on CNBC-TV18. Also watch the accompanying video.

Q: Just walk us through the details that you know right now about how doable this combination is and how close it might be to fructifying into an actual deal?

A: As we reported, it could happen and it might not happen. It is still unclear whether the companies will finalize it; so it is hard to say how close it is. The two companies have very different cultures. IBM is an old company, people say we are tied to work and the CEO’s son has a ponytail. So there are these cultural differences but in terms of the technology I don’t see any reason on the face of it why it shouldn’t work. I am sure, ideally, it is workable.

Q: What do you think is the stumbling block then right now? Is it the money or is it something else?
A: It is hard to say as this point the problem is the 100% premium and Sun’s shares are really depressed because of the stock market and because tech has been in trouble. So it is hard for Sun to sell-off much than that, but it is also hard for IBM to argue to its shareholders that you should pay double to what the company is trading for. So that could be one issue and another one is the questions of regulatory things. There aren’t that many server makers in the US and two of the top four server makers merging there could be regulatory stumbling blocks. There are all sorts of different things that can come up. It is hard to tell right now.

Q: I am not sure how carefully you track IBM but out here in India there was a lot of talk about how IBM might be interested in technology company called Satyam that’s up for grabs––any thoughts on whether IBM would be interested in an entity like that or they’ve actually got bigger game going right now?

A: If I knew the answer to that I would have written that story as well. I have followed the news and I think Satyam has its own share of interesting problems to resolve. I have no idea whether IBM or any other company is making a serious case but I wouldn’t be surprised if someone buys it because it seems like it has got a desirable book of business. But is something that is totally out of my region of expertise.