Sun buys Forte in $540M deal

Sun Microsystems, Inc. (Nasdaq: SUNW) and Forte Software, Inc. (Nasdaq: FRTE) said Monday they have agreed to a stock-for-stock merger worth about $540 million.

Shares of Forte closed up 17.75 percent Friday and jumped another 20 percent in early trading Monday. Forte was up 3 9/16 to 20 9/16. Sun was off 3/16 to 74 1/16.

Shares of Sun, the provider of networking hardware, software and services, have been going up since the company rose above analysts' expectations for its fourth quarter.

Sun is fortifying its network-computing products with Forte Software Java technology and enterprise applications. Sun intends to use Forte's software and expertise in its line of Internet development and deployment products, working with Forte on multiple platforms including Sun, HP, Microsoft and IBM, according to Ed Zander, president and chief operating officer of Sun in a company statement.

With this acquisition, Sun adds Forte's team, customers, and products to its network computing portfolio. Forte's strengths complement Sun's Java platform, as well as the iPlanet products from the Sun-Netscape Alliance.

Under terms of the agreement, each share of Forte common stock will be converted into 0.3 shares of Sun stock. Based on Sun's closing price on August 20, that puts the merger at around $540 million, or about $22.275 per Forte share.

The merger is expected to be completed during Sun's second quarter of fiscal 2000, which ends December 31, 1999, subject to Forte shareholder approval. Following completion of the merger, Forte will operate under its own name as a subsidiary of Sun.