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July 21, 1997updated 05 Sep 2016 12:10pm

SUN WILL PURCHASE ASSETS OF ENCORE COMPUTER

By CBR Staff Writer

After weeks of negotiations Sun Microsystems Inc has confirmed it will purchase the assets of Encore Computer Corp’s Storage Products Business. The deal was first proposed back in May (CI No 3,170) but both companies have remained tight lipped about it since then. Sun will pay Encore $185m in cash; $150m will be paid on completion and the remaining $35m on July 1, 1998. Encore is to pay back debts of around $90m from the cash generated from the sale, to its principal shareholder Gould Electronics Inc, following the signing of an additional agreement. Encore will now be back on track with a healthy balance sheet and an improved financial outlook, according to the company. Ed Saunders of Sun said the company will tightly integrate Encore’s storage sub systems with its server business. Sun has said it wants to be what IBM was to the mainframe storage business for the network computer market, and aims to be one of the top three open storage companies, along with IBM Corp and EMC Corp. Saunders commented: I think we can give EMC a run for its money. The closing of the transaction between the two companies is subject to approval of Encore shareholders, and finalization is expected in October. Until then Sun will sit tight. It has apparently has been looking at the storage market for some time, and at alternative acquisition prospects. There weren’t many company’s around frankly, commented Sanders, but said that Encore fitted the business plan. The company will acquire the assets of Encore’s storage business, including its staff, but Sun is being vague about exact staffing levels, and has said it won’t be able to comment until the deal is complete.

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