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McNealy Mulls Taking Sun Private

Silver Lake Partners would help with the leveraged buy-out until the company got itself out of the weeds.

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Scott McNealy is considering a plan that would take his beloved Sun Microsystems off the market at least for a while, according to a report published Thursday.

A hedge-fund manager with ties to McNealy and venture capital firm Silver Lake Partners told Business Week that Sun's CEO and co-founder is talking to investment managers about a leveraged buy-out (LBO). The financial transaction would mean Sun's management would repurchase all public shares and take the company off of the publicly traded markets.

A spokesperson for Sun declined to comment on the report. Silver Lake executives were not immediately available to respond.

The transaction would more than likely trigger substantial debt until Sun had a chance to evaluate its business and take action. The hedge-fund manager told reporters that Sun could take the time to sell off some of its assets, reinvest in its hardware, software and services business, and go public again.

Silver Lake has experience in LBOs, having done the same for storage and hard drive manufacturer Seagate Technology and financial services software vendor SunGard Data Systems .

The hedge-fund manager also said the timing is good for Sun to pull off an LBO, considering the company has $7.5 billion in cash reserves.

Sun's stock is now less expensive, having slid down from $5.55 per share back in November 2004 to its closing price Thursday of $3.44.






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