Global Economics

Oracle Soothes EU with Offer in Sun Deal


The software giant's $7.4 billion takeover of Sun Microsystems could clear European antitrust cops after Oracle agreed to invest in Sun's MySQL database

By Matthew Newman and Ben Moshinsky

(Bloomberg)—Oracle (ORCL) pledged to continue investing in Sun Microsystems Inc.'s competing database software after its planned $7.4 billion purchase of the computer maker was threatened by European Union antitrust regulators.

The European Commission said Oracle's proposal addresses concerns about the acquisition of Sun's MySQL database product, signaling the EU will approve the acquisition next month. European Competition Commissioner Neelie Kroes said in a statement that she's "optimistic that the case will have a satisfactory outcome."

The offer, in the form of a pledge to customers and developers, followed a two-day hearing in Brussels late last week. Redwood City, California-based Oracle held talks with commission officials on Dec. 11, according to a person close to the negotiations.

Oracle hasn't made any "onerous concessions" by promising to invest in MySQL, said Zaineb Bokhari, an analyst at Standard & Poor's in New York. "It is an assurance. That may have been what the EU regulators wanted to hear. The stage seems set for the deal to be approved."

Investments, Licensing

The commission had threatened to block the deal because of concerns that Oracle might be able to eliminate MySQL as a competitor. Oracle, the world's second largest software maker, said in a statement today that it will boost investment in MySQL and is committed to keeping MySQL's open-source licensing platform.

Gaye Hudson, an Oracle spokeswoman in the U.K., couldn't be immediately reached to comment. Jonathan Todd, an EU spokesman, said Oracle hadn't formally presented the proposal to the commission.

Oracle rose 51 cents, or 2.3%, to $23.31 at 10:48 a.m. New York time in Nasdaq Stock Market trading. Sun rose 81 cents, or 9.7%, to $9.17.

Oracle Chief Executive Officer Larry Ellison said in September that he wouldn't sell MySQL, which is a key part of the Sun acquisition. The commission's delay in approving the deal is costing Santa Clara, California-based Sun $100 million a month, he said.

MySQL's market share is estimated by IDC, a research firm in Framingham, Mass., at 0.2% with $40 million in revenue in 2008.

The commission has said MySQL, with about 60,000 daily downloads, is the most deployed open-source database and its "competitive significance is much greater than its very small market share based on revenue would suggest." MySQL's program is based on freely distributed code.

Green Light

"Neelie Kroes has switched on the green traffic light," Charles van Sasse van Ysselt, a competition lawyer at NautaDutilh in Brussels, said in a telephone interview today. "She is optimistic and this is a step in the right direction."

Oracle said in a statement that it committed to customers, developers and users of MySQL that it would maintain aspects of the software's architecture, increase spending on research for the product and create a customer advisory board.

The EU in a separate statement today said the deadline to approve the Sun acquisition remains Jan. 27.

Oracle received U.S. antitrust approval for the acquisition in August. The commission began an in-depth review of the takeover in September.

The probe followed lobbying by Oracle competitors, including SAP AG and Microsoft Corp.

To contact the reporter on this story: Matthew Newman in Brussels at mnewman6@bloomberg.net


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