Hawkins pushes for merger of IT giants

Published on Saturday 18 April 2009 14:08

TOUGH-talking Tennessee billionaire O Mason Hawkins has emerged as the pivotal investor knocking executive heads together to secure a takeover deal involving two US technology giants.

IBM, which has its headquarters in New York, and Sun Microsystems, based in Santa Clara, have been locked in on-off negotiations for the past month to merge the world's number one and four manufacturers of computer servers.

But the talks have stalled on more than one occasion. This has left hundreds of technology workers at two separate Scottish operations, IBM in Greenock and Sun Linlithgow, waiting to hear if their jobs are safe.

Now Hawkins, a finance portfolio veteran carrying significant clout in global technology circles, and once dubbed the "Warren Buffet of mutual funds", has stepped in. He heads Southeastern Asset Management, with $43bn in funds, and a 22% stake in Sun, the largest single holding in the beleaguered company.

Hawkins is understood to be manoeuvring Sun board members in IBM's direction to secure a takeover. The deal is now likely to cost significantly less than the $7bn (4.7bn) on the table 10 days ago.

Last week IBM said it was withdrawing its offer. Then the talks appeared to be revived after it was approached by Sun on Thursday to return to the negotiating table.

Many investors think a deal is still possible, even though IBM is playing hard to get, probably to drive the price down after Sun rejected as too low a bid of $9.40 (6.40) per share.

Avi Cohen, head of research at Avian Securities, urged the two sides to talk again. "If the deal made sense a couple of weeks ago, it certainly would still make sense today.

"If there is a willingness, which I think there is, if there was a business case, which I think there is, I think they will start up talks."

The US Justice Department and Securities and Exchange Commission have joined the European Union to warn that the takeover could be subject to a lengthy antitrust review.

&#149 Meanwhile, Scotland's information and communication technologies sector faces virtual extinction unless it gets rid of its "geeky" image, the inaugural chairman of the Scottish Government's recently-formed ICT Industry advisory group has warned.

Gerry Docherty, chair of the ICT Industry Advisory Group, said: "Every year the systemic failures of the Scottish ICT community bring closer its increasingly inevitable demise."

He conceded that the country's IT sector is faring particularly well in the recession. But he claimed this relatively healthy state of affairs only masks an insidious threat.

Docherty's comments were described as "harsh" and "negative" by other commentators in the Scottish technology industry.

Gerry Watt, chief executive of Electronics Scotland, said: "It is a bit harsh as Scotland has particular technological strengths."