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Oracle Corp. and Sun Microsystems said Monday they have reached a friendly takeover deal in which Oracle will pay $9.50 US a share in cash to acquire Sun.

The deal is worth approximately $7.4 billion US, or $5.6 billion after factoring out Sun’s cash and debt.

"With the acquisition of Sun, Oracle is now able to make all of the pieces of the technology stack fit together and work well," Oracle CEO Larry Ellison said on a conference call.

The takeover would give Oracle access to Sun's Java language and software, which runs on about one billion machines globally, and to its Solaris operating system, which is a platform for Oracle products.

"Oracle and Sun have been industry pioneers and close partners for more than 20 years," said Sun chairman Scott McNealy. "This combination is a natural evolution of our relationship and will be an industry-defining event."

Investors reacted by sending shares of Sun up more than 36 per cent, as the stock closed up $2.46 to $9.15 in trading on Nasdaq. Oracle fell 24 cents to $18.82.

Earlier this month, after Sun ended IBM's status as its exclusive negotiating partner, IBM withdrew its offer — which was worth $9.40 a share  — to acquire the company.

Oracle expects Sun will add more than $1.5 billion to its adjusted profit in the first year, and more than $2 billion in the second year.

The takeover will end Sun's 27-year history as an independent company. While Sun produced sales of $13.3 billion in the last 12 months, the company has struggled to turn a profit. It lost $1.9 billion over the last four quarters.

With files from The Associated Press