The New York Times reports that IBM has withdrawn its offer to buy Sun Microsystems after the Sun board rejected the lower offer.

Deal insiders said IBM had offered $9.55 a share, down from a bid of $10 a share, but on the basis that IBM wouldn’t be able to forfeit the deal. However, after the legal review, Big Blue subsequently lowered its bid to $9.40.

At about $9.50 a share, the deal placed a $7 billion value on Sun, which was almost 100 percent more than its value prior to rumors of IBM’s interest in acquiring the company.

Industry observers say that Sun, having baulked at IBM’s offer, is now in a difficult position with no clear way out of its financial troubles.

Source: Steve Lohr and Ashlee Vance, “I.B.M. Withdraws $7 Billion Offer for Sun Microsystems,” The New York Times, April 5, 2009

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