A good move for Oracle, but IBM isn't worried

After IBM (IBM) decided to not follow through with its purchase of Sun Microsystems (JAVA), Oracle (ORCL) slipped in and made the deal a reality. Oracle has entered into a definitive agreement to purchase Sun common stock for $9.50 per share cash. The premium for the deal comes in at $2.81 per share, as Sun closed Friday at $6.69 per share. The total price tag for the transaction is roughly $7.4 billion, which is $5.6 billion net of Sun's cash and debt.

Oracle President Safra Catz expects "this acquisition to be accretive to Oracle's earnings by at least 15 cents on a non-GAAP basis in the first full year after closing." With the second year coming in better than that, the deal has definite potential for Oracle. Oracle's CEO Larry Ellison said that this transaction "transforms the IT industry, combining best-in-class enterprise software and mission-critical computing systems."