Sun Microsystems has found a savior in the form of Larry Ellison, and his software behemoth Oracle. The two companies announced Monday that Oracle would buy Sun in a transaction valued at US$7.4 billion, or $5.6 billion after Sun's debt and cash holdings are taken into account.

"The acquisition of Sun transforms the IT industry, combining best-in-class enterprise software and mission-critical computing systems," Oracle CEO Larry Ellison said in a statement. "Oracle will be the only company that can engineer an integrated system – applications to disk – where all the pieces fit and work together so customers do not have to do it themselves. Our customers benefit as their systems integration costs go down while system performance, reliability and security go up."

Oracle cited two reasons for buying Sun, the Solaris operating system and Java, though Sun's main business since its inception has been as a hardware vendor with its own proprietary OS, Solaris. Solaris has long been considered one of the best versions of Unix for Enterprise, but encroachment from Linux and Windows into the Enterprise space long ago put Sun on the defensive.

Earlier this year, Sun and IBM were negotiating a buyout of the company, talks Sun walked away from after saying the company wasn't satisfied with the terms IBM was offering. Today's announcement with Oracle comes as somewhat of a surprise.

It wasn't that long ago that Sun was trying to buy Apple. In 1996, when Apple was on the ropes, the two companies were close to closing a deal, one of several companies that Apple turned to at the time in search of its own salvation. That deal fell through, however, as did two other merger negotiations the companies also entered.