Oracle-Sun Deal wins Europe Approval

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1. amomipais82
   

   Hi,
   Oracle Corp., the world’s second- biggest software maker, probably will win approval from European regulators to acquire Sun Microsystems Inc. today, clearing the transaction’s final obstacle, an analyst said.
   
   The $7.4 billion purchase may close within a day if the European Commission gives consent, according to ISI Group analyst Heather Bellini in New York. The Brussels-based regulator is reviewing whether Oracle may use Sun’s MySQL, the world’s most-popular open-source database, to quash competition, she said in an interview.
   
   “Oracle is the biggest seller of the commercial software, and it’s a question of whether Oracle will take away competition in the database market,” said Bellini. MySQL, whose software code is available free online, generates so little revenue in Europe it won’t affect the deal, she said.
   
   The antitrust authority for the 27-member EU also is examining Sun’s licensing of Java software, said Peter Alexiadis, an antitrust lawyer at Gibson Dunn & Crutcher LLP in Brussels. More than 6 million developers use Java to create applications, according to Sun’s Web site. Oracle also writes business-management and so-called middleware software on Java.
   
   For the commission to block the deal or begin an in-depth investigation, it must have “serious doubts” about competition, said Alexiadis, who doesn’t work for either company. That means regulators must prove that Oracle will raise prices or change conditions for accessing programs such as Java, he said.
   
   Investors, speculating the deal wouldn’t close by today’s deadline, traded bearish Oracle options to the highest in three months yesterday. Trading of puts that give the right to sell the stock surged to 32,708 contracts, five times the four-week average and double the number of call options, which give the right to buy the stock.
   
   Bearish Options
   
   The most-active contracts were December $20 puts, which gained 19 percent to 95 cents and accounted for about two-thirds of the puts changing hands. October $18 puts rose 50 percent to 15 cents for the biggest gain among Oracle options.
   
   “Option trades on Oracle indicate that investors are taking caution given the uncertainty over the EC’s ruling,” Caitlin Duffy, equity options analyst at Greenwich, Connecticut- based Interactive Brokers Group Inc., wrote in a note.
   
   The EC said in July it would either approve the deal by Sept. 3 or extend its investigation of the transaction by 90 working days. The U.S. Justice Department approved the acquisition last month.
   
   Prolonged Review
   
   If European regulators prolong their review, the purchase could still be completed within about 30 days without conditions, Bellini said in a report.
   
   Dana Lengkeek, a spokeswoman for Santa Clara, California- based Sun, declined to comment. Deborah Hellinger, a spokeswoman for Oracle, didn’t reply to an e-mail seeking comment.
   
   Sun’s shareholders voted July 16 to accept Oracle’s offer. Oracle, based in Redwood City, California, announced plans to buy Sun in April, to gain the company’s Java programming language and Solaris operating system. Oracle Chief Executive Officer Larry Ellison said Java was the main reason behind his decision to buy Sun.
   
   Oracle, which trails only Microsoft Corp. in software sales, fell 17 cents to $21.77 at 4 p.m. New York time in Nasdaq Stock Market trading yesterday. The shares had advanced 23 percent this year before today. Sun advanced 12 cents to $9.32.
   Hope it helps

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