Software major, Oracle is set to acquire Sun Microsystems in a deal valued at $ 7.4 billion. The development sounds surprising because it was widely believed that the fall out of talks between IBM and Sun will bleed Sun Microsystems as there where no other takers interested in the firm

For Sun however the new development provides a heavy respite as it had witnessed significant erosion of its share value post-fallout of talks with IBM. There were also reported conflicts between the board members. Even the employee sentiments were reported to be on downside owing to lack of clarity of future of the company.

“We expect this 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,” said Oracle President Safra Catz.

“We estimate that the acquired business will contribute over $1.5 billion to Oracle’s non-GAAP operating profit in the first year, increasing to over $2 billion in the second year,” Catz said.

“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,” commented Catz.

Acquisition by Oracle will however put a curtain on these speculations and in fact Oracle has acknowledged that the acquisition will bring in more profitability to the firm within couple of years time.

As per Oracle, the boards of both the companies have approved the transaction and the deal is likely to be formally completed by this summer. The deal also needs to be approved by the stockholders of Sun, certain regulatory approvals and customary closing conditions.