Apple Courts Friendly Suitor To Block Hostile Takeover Bid

Apple Computer may be warming up to a takeover bid.

But it’s not from Larry Ellison.

After giving Ellison’s overtures for a stock buyout the cold shoulder, the embattled computer maker could be forced into seeking a friendly merger partner, according to industry observers.

Executives close to Apple said the company is actively pursuing a friendly suitor instead of facing Ellison’s hostile bid.

An unnamed executive who does business with Apple said Apple employees told him the company was again in talks with Sun Microsystems, the Mountain View-based workstation maker, the New York Times reported.

Sun had considered buying Apple more than a year ago, but the deal disintegrated after the two companies could not agree on a purchase price.

“Theoretically speaking, whenever there’s talk of a hostile takeover, you look for a white knight,” said Todd Bakar, an analyst at Hambrecht & Quist in San Francisco. “It could happen.”

Oracle chief executive Ellison two weeks ago said he intends to form an investment group that would buy 60 percent of Apple’s stock for about $1 billion and jettison the company’s current management team. He said Oracle is not involved in the deal.

The rumblings surrounding Sun are the latest twist to a bizarre global power play for Apple. If Sun does bid for the company, it not only faces competition from Ellison but another flamboyant billionaire: Saudi prince Al-Waleed Bin Talal.

Al-Waleed says he has paid $115 million to gobble up more than 5 percent of Apple over the last few weeks, and added he may not be through.

The prince, who has a string of successful investments in troubled companies, said he thinks Apple has the potential to come back.

Apple and Sun declined comment.

Apple has a long, well-documented history of star-crossed flirtations with potential suitors. Over the past several years, the company has discussed merger attempts with Sun, IBM and AT&T.

Ellison’s bid, however, has been the most public so far.

Although Ellison has not discussed what he plans to do with Apple, industry insiders said he will probably sell off the company’s hardware business to one of its clone rivals and create a series of businesses around Mac operating system software, including low-cost Macs.

Apple’s Chief Executive Gil Amelio has said that he will not let Ellison’s bid “distract” him. Privately, he has told developers he is “not the least bit interested” in the take-over attempt.

Meanwhile, Apple watchers were lukewarm on the possibilities of an Apple buyout.

“The chances are less than 50-50,” said Vadim Zlotnikov, an analyst at Sanford C. Bernstein Co. in New York. “Sun would do it purely for strategic, not financial, reasons.”

Zlotnikov said Sun would most likely meld the Mac operating system, which runs the basic functions of a Macintosh, into its line of popular computer server products.

“Unless it’s really friendly, (Apple) won’t go for it,” said Tim Bajarin, president of Creative Strategies in San Jose. “I’m absolutely convinced that Apple management is working on turning this thing around. They don’t want to panic at this point.”