REDWOOD SHORES, CA -- Oracle is breaking into the equipment business in a big way, agreeing to buy Sun Microsystems in a $7.4 billion deal. Closing is expected this summer.

The deal with Oracle comes just weeks after Sun and IBM failed to strike a deal. That deal failed to materialize when the companies couldn't agree on a price and IBM's demand for exclusive negotiations, according to published reports. IBM also was reportedly scared off by potential antitrust issues from acquiring its networking equipment competitor.

Under the terms of the deal, Oracle will acquire Sun and its assets, its employees and IP, and its cash and debt. Net of the latter, the deal is worth $5.6 billion, Oracle said.

Oracle's board must approve the bid. Sun's board has signed off on the deal.