Sun buys Cobalt for $US2 billion

Sun Microsystems is to acquire Cobalt Networks in order to add a server appliance to its server portfolio.

Sun Microsystems in order to add a server appliance offering to their server portfolio, announced Tuesday that it will acquire Cobalt Networks in a stock-for-stock merger valued at $US2 billion.

Mountain View, California-based Cobalt supplies server appliances, such as their Cobalt Qube, Cobalt Cache, Cobalt RaQ and Cobalt NASRaQ to businesses, ISPs (Internet service providers) and educational institutions for Web hosting. These appliances deliver network-based services.

Under the terms of the merger agreement, each share of Cobalt common stock will be converted into 0.5 Sun shares, resulting in a purchase price of $US2 billion. According to the statement, Sun expects to complete the purchase of Cobalt during the second quarter of its 2001 financial year, which ends December 31, 2001. The closing of the acquisition is subject to standard governmental approvals, Cobalt shareholder approval and customary closing conditions.

After the merger is completed, Cobalt will become the server appliance business unit of Sun's Network Service Provider organisation, the companies say.

Through the merger, Cobalt expects to increase sales of server appliances, while Sun expects to establish their company in the low-end server appliance market, according to the statement.

This year, Sun has also purchased Innosoft International to strengthen its iPlanet E-Commerce solutions, operated with America Online's Netscape Communications.

Sun, in Palo Alto, California, can be reached at Cobalt, based in Mountain View, California, is at

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