Merger in doubt after IBM pulls $7b Sun bid

IBM has reportedly withdrawn its $7 billion bid for Sun Microsystems, after Sun rejected a reduced offer from IBM.

IBM had reduced its offer from $9.55 over the weekend. Inside sources told  Reuters the offer had been reduced to $9.50 per share. But the New York Times reported  that the offer had been reduced to $9.40.

Three separate sources also confirmed to the Times that the companies had failed to agree on a price.

IBM lowered the price in part because Sun's contracts with senior employees include payment terms which were higher than IBM had anticipated, the sources said.

Sun will now be released from a contract clause preventing the company from soliciting alternative offers for the company.

Sun stock on the NASDAQ closed at $8.49 on Friday, prior to the reports.

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