IBM-Sun takeover talks 'collapse'

Sun is expected to report a third straight quarterly loss

IBM's talks to acquire computer hardware maker Sun Microsystems $7bn (£4.7bn) takeover have broken down, media reports say.

The talks were said to be in their final stages in recent days and it is not clear whether the collapse in negotiations is final.

News that the tie-up was in trouble sent Sun shares lower, to close 23% down, while IBM shares slipped 0.65%.

Buying Sun would have been IBM's biggest purchase to date.

IBM reportedly offered about $9.50 per share, near double the value of Sun's shares when the deal was first reported last month.

Sun, which developed the Java programming language, was an investor darling during the technology boom.

But the firm is being hit as the recession dents demand for its products.

Sun is in the process of cutting 6,000 jobs and it is expected to report a third consecutive quarterly loss.

Company sources told the Associated Press news agency that the two sides were haggling over price and also over whether IBM would go ahead with the deal if competition issues emerged.

Sun's shares ended at $6.56 and IBM shares ended at $101.56.