Software giant Oracle Corp. announced on Monday that it is to buy Silicon Valley-based Sun Microsystems for 7.4 billion U.S. dollars, or 9.50 dollars per share, hailing the acquisition as an event that "transforms the IT industry."

The surprising announcement came about two weeks after merger talks between Oracle's rival IBM and Sun broke down, but IT website ZDNET quoted IBM CFO Mark Loughridge as saying that IBM was not worried and that "the only thing that will really change is the address for Sun."

The takeover unanimously approved by Sun's board of directors and expected to close this summer pending approval from stockholders and federal regulators, gives Oracle two key Sun software assets: Java programming language and Solaris operating system.

Oracle called the Java programming language "the most important software Oracle has ever acquired" and said that its fastest growing business, Oracle Fusion Middleware, is based on Java. And Solaris is the leading platform for the Oracle database, Oracle's largest business.

"We estimate that the acquired business will contribute over 1.5 billion dollars to Oracle's non-GAAP operating profit in the first year, increasing to over 2 billion dollars in the second year," said Oracle President Safra Catz in a statement.

"This would make the Sun acquisition more profitable in per share contribution in the first year than we had planned for the acquisitions of BEA, PeopleSoft and Siebel combined," said Catz.

Sun Chairman Scott McNealy saw the merger as "an industry-defining event." "Oracle and Sun have been industry pioneers and close partners for more than 20 years. This combination is a natural evolution of our relationship," he said.