I have been thinking about this deal. Also did some reading on the internet.
What strikes me about this deal is that Sun does not need this cash at the moment. And KKR is definitely a really big name to take on a seemingly weak position as they have done now. Well, these guys are of the RJR-Nabisco fame.
Plus, this investment is by KKR Private Equity Investors, a publicly traded fund of KKR & Co. KKR charges a premium of 1.9% plus 20% of the profits from the investors to this fund. For that kind of charges, the investors definitely expect a lot more than what the market would provide.
So, what are the possibilities:
- KKR is known for leverage buyouts. May be, Sun wants to take itself private.
- Firms involved in LBOs are known to buyout undervalued companies, turn them around and sell them at a profit. May be Sun can learn a thing or two from KKR. Monetize Java.
- Or as Jonathan said publicly, Sun is out to buy some companies. Now, which one could they be? Some Web 2.0 kind?
I found this ZDNet blog very interesting read and this entry has borrowed several of the ideas listed there.