IBM and Sun acquisition talks broke down.

In my previous entries I wrote about negotiations between world's No. 1 and No. 4 makers of server computers IBM and SUN Microsystems respectively, and potential consequences of that deal where merged company would hold 65 percent of the $17 billion market for Unix servers. But things have been dramatically changed since recent developments of the story.

According to The Wall Street Journal IBM has withdraw its offer for Sun Microsystems, its main rival servers supplier, after Sun has sent a notice to IBM terminating its right to exclusive negotiations. Two companies are reported to have been in merger talks for a couple weeks, but they had reportedly been haggling over a price. Eventually last week Sun's board has rejected a formal offer from IBM, considering the offer price too low and declaring concerns that the offer gave IBM too much authority to walk away from the deal.

IBM is believed to have made an initial offer for Sun worth $9.55 per share, but subsequently cut that to $9.40, after its lawyers pored over the details. While Sun shares had risen to $8.49 on last week, from $4.97 on March 17, a day before talks between the two technology companies were first reported. But Failure to secure a deal will raise questions over the future of Sun. By entering into negotiations, its board has potentially signalled a lack of faith in its ability to operate as a standalone company. Shares of Sun Microsystems fall 23 percent on Monday after the company rejected rival IBM's $7 billion offer.