Oracle Corp. agreed to buy Sun Microsystems Inc. for about $7.4 billion in cash, swooping in after the server maker’s talks to be acquired by International Business Machines Corp. failed.

Oracle will pay $9.50 a share, 42 percent more than Sun’s closing price on April 17. Oracle plans to make Sun a profitable part of its business and said the purchase will add $1.5 billion to operating earnings, excluding some items, in the first year.

The takeover moves Oracle, the world’s second-largest software maker, into the market for server and storage computers, pitting the company against IBM and Hewlett-Packard Co. Oracle Chief Executive Officer Larry Ellison also gains Sun’s Java programming language and Solaris operating system, which work with its top-selling database program.

“They’re really going to zero in on just the most strategic part of Sun’s hardware business,” said Heather Bellini, an analyst at UBS AG in New York, with a “buy” rating for Oracle’s shares. “They’ll end up making the company much better run.”

Excluding Sun’s cash and debt, the deal is valued at $5.6 billion, Oracle said in a statement. Sun had about $2.6 billion in cash and marketable securities, and about $700 million in long-term debt at the end of 2008. Oracle has about $11.3 billion in cash and marketable securities.

Sun, based in Santa Clara, California, rose $2.46, or 37 percent, to $9.15 in Nasdaq Stock Market trading at 13:50 p.m. New York time. Oracle, based in Redwood City, California, dropped 41 cents to $18.65.

(Bloomberg.com)