ORACLE has made a play for Sun Microsystems to the tune of around $US7 billion or $US9.50 per share in cash.
The transaction is valued at approximately $US7.4 billion, or $US5.6 billion net of Sun's cash and debt, Oracle said.
Talks between IBM and Sun reportedly fell apart after it was reported that IBM withdrew a $US7 billion offer for the high-tech computing firm a few weeks ago after Sun rejected a bid of up to $US9.40 per share as too low.
Oracle said the proposed merger is subject to Sun stockholder approval, certain regulatory approvals and customary closing conditions.
"Until the deal closes, each company will continue to operate independently, and it is business as usual," Oracle said.
"The acquisition combines best-in-class enterprise software and mission-critical computing systems."
"We estimate that the acquired business will contribute over $US1.5 billion to Oracle's non-GAAP operating profit in the first year, increasing to over $US2 billion in the second year,” said Oracle president Safra Catz.
"This would make the Sun acquisition more profitable in per share contribution in the first year than we had planned for the acquisitions of BEA, PeopleSoft and Siebel combined," she said.
Oracle expects the 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, Ms Catz said.
Sun chairman Scott McNealy described the merger as an "industry-defining event”.