Sun Microsystems is to buy StorageTek for $.1bn.

The deal amounts to $37 cash for each StorageTek share. This represents an 18% premium.

Market rumours suggest that Sun may have chosen StorageTek because, it could afford the deal without giving up any control.

Sun has a massive $7bn cashpile. StorageTek will soak up some of that. However StorageTek has $1.1bn of its own cash.

This is not an acquire and turnaround situation, McNealy said. "(StorageTek) is generating cash and making money."

Sun has a massive $7bn cashpile. StorageTek will soak up some of that. However StorageTek has $1.1bn of its own cash.

This is not an acquire and turnaround situation, McNealy said. "(StorageTek) is generating cash and making money."

The combined company management structure was not announced.

StorageTeks business centres on tape storage and data backup markets. Sun in contrast has concentrated storage area network (SAN) and network attached storage (NAS) systems and software.

Sun obviously hopes that the combination will give them a enhanced prescence in the data storage room.

The expected close of the deal is likely to be late Summer or early Autumn.

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