Shares of Sun Microsystems dropped today after a source with knowledge of the matter said IBM's talks to acquire its smaller rival have broken down.
Sun Microsystems' Frankfurt-listed shares were down 23.9 per cent at €4.74 by 8.16am, while IBM's stock there was down 0.4 per cent at €75.50.
The source had told Reuters last night the talks had collapsed after Sun rejected IBM's $7 billion offer.
The buyout was seen as a means of survival for the Silicon Valley company, which has been losing market share. A deal would also have helped IBM compete more effectively against rivals such as Hewlett-Packard.
An IBM spokesman had declined to comment, while Sun officials did not return calls.
Sources told Reuters in March that IBM was in exclusive talks to buy Sun and had proceeded to the due diligence stage. One source had said on Saturday that IBM lowered its offer price for Sun to $9.50 a share from $9.55 a share and that a deal may be announced this week.
Sun shares had risen to $8.49 on Friday, from $4.97 on March 17, a day before talks between the two technology companies were first reported. T he Wall Street Journalhad previously said IBM's original bid was $10 to $11 a share.