IBM’s Takeover Discussions With Sun Said to Collapse

International Business Machines Corp.’s acquisition talks with Sun Microsystems Inc. have collapsed, putting the biggest technology deal of the year at risk of failure, a person familiar with the matter said.

Sun informed IBM yesterday that it was breaking off exclusive negotiations, and in response IBM withdrew its offer to buy Sun, according to a person familiar with the situation. The price being discussed was about $9.40 a share. Sun officials said that price was too low, said the person, who declined to be identified because the talks are private.

At the price being discussed, the purchase would be the largest in IBM’s history. Sun balked because there were no guarantees in the merger contract that IBM would close the deal if the companies encountered barriers or delays such as an antitrust review, the person said.