Buying Sun (JAVA) While There’s Still a Gap
IBM is in talks to buy Sun Microsystems (JAVA) “sources with knowledge of the matter said.”
“International Business Machines Corp is offering to pay at least $6.5 billion, or double Sun’s Tuesday closing price of $4.97, The Wall Street Journal reported online earlier…”
“Sources say talks could still fall apart, but a deal could go through as early as this week”
“…is likely to pay $10 to $11 a share for Sun Microsystems Inc…. The Wall Street Journal reported Wednesday on its Web site.”
Based on that info:
Target Price: $9.94 - $11
My entry point: $8.20 (based on the $9.94 price; the $11 price info came out later in the day)
Gap: minimum 21% ROI
I’m in at $8.20 /sh today for my simulated portfolio. I think this might be one of those deals that begs a higher price. I have no basis for that opinion, but since ~$10 is the starting point, I can see the offer going up (or maybe other suitors coming to the table to push it up a bit). We’ll see!
Sources:
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