The combination will create a new global leader in comprehensive network computing and data management which collectively had total annual revenues of more than $13 billion in the past four quarters. Together, Sun and StorageTek can offer customers the most complete range of products, services and solutions available for securely managing mission-critical data assets. By bringing a systems approach to Information Lifecycle Management (ILM), Sun will be well-positioned to help customers better manage their growing privacy, security, compliance and policy requirements.

Under the terms of the agreement approved by both boards of directors, StorageTek stockholders will receive $37 per share in cash for each StorageTek share for an aggregate value of approximately $4.1 billion, including the assumption of employee stock options. Sun expects the transaction to be accretive to non-GAAP earnings in the first 12 months following the closing.

"Sun's technical and financial strength puts us in a great position to act as a consolidator in the IT industry. This acquisition is part of an ongoing strategy to respond to customers seeking to rationalize their datacenter purchases - to free up time and dollars to focus on compliance, architectural integration, security and, of course, the bottom line," said Scott McNealy, chairman and chief executive officer, Sun Microsystems, Inc. "With this announcement, Sun solidifies its leadership position, with the highest volume computing platforms, the most comprehensive data and identity management solutions, and when combined with StorageTek, an unmatched ability to earn the confidence of customers as they develop, deploy and manage information assets throughout their entire lifecycle."

"Together, the two companies enjoy financial strength, a complete systems offering, an impressive list of blue chip customers and global reach. We look forward to welcoming the StorageTek workforce into the Sun organization and are confident that the combined enterprise, with its broader range of products, services and capabilities will significantly expand our customer base and opportunities for growth," added McNealy.

"StorageTek's decision to combine with Sun reflects our determination to act in the best interests of our customers, shareholders, employees and other constituents," said Patrick J. Martin, chairman, president and chief executive officer, StorageTek. "By joining forces with Sun to form a combined enterprise with greatly enhanced technological, operational and financial resources, we are positioning that enterprise for accelerated growth and solid performance for years to come. I strongly believe that for StorageTek and all our constituents, this is the right transaction, with the right partner, for the right reasons, at the right time," Martin concluded.

The products, services and solutions currently offered by Sun and StorageTek complement each other, and form one of the most comprehensive storage and data management portfolios in the industry. Sun today offers a line of innovative storage and networking products, including the Sun StorEdge 6920 storage system, a platform for virtualization and data services on almost any vendor's storage system. Coupled with StorageTek's new line of data protection and intelligent archive products, including its Storage Resource Management software and virtual tape solutions, Sun customers will have the ability to implement comprehensive ILM storage infrastructures with intelligence to maximize storage utilization and ensure compliance in enterprise, midrange and workgroup environments.

Following completion of the proposed transaction, which is expected to occur in late Summer/early Fall 2005, StorageTek will become fully integrated within Sun's organization. In the interim, a joint team with representatives of both companies will develop integration plans that build upon the technological, product and cultural synergies and the best business and product development practices of both companies.

Completion of the transaction is subject to regulatory approval, StorageTek shareholder approval and other customary closing conditions.