Business software manufacturer Oracle has said it is to acquire computer hardware maker Sun Microsystems in a deal worth $7.4bn (£5.1bn).
Oracle is to pay $9.50 in cash for each Sun share, it said. Oracle said the buy "transforms the IT industry, combining best-in-class enterprise software and mission-critical computing systems".
Oracle shares were down 5.56% and Sun's were up 27% in trading before the open of the New York Stock Exchange.
'Natural evolution'
The deal comes a month after IBM abandoned its bid to buy Sun.
The deal would strengthen Oracle's position against IBM
Computer industry analyst Robert Jakobsen
"Oracle and Sun have been industry pioneers and close partners for more than 20 years," said Sun chairman Scott McNealy.
"This combination is a natural evolution of our relationship and will be an industry-defining event."
Sun said its board of directors had unanimously agreed the deal, which is expected to be completed this summer after approval from shareholders and government regulators.
Computer industry analyst Robert Jakobsen said he was initially "a little bit surprised".
"It could make sense," he added.
"The deal would strengthen Oracle's position against IBM. Oracle has done a good job on acquisitions it has done earlier."