The Wall Street Journal reports the same thing, saying that Sun’s board rejected IBM’s offer on the basis that it was too low.
IBM lowered its initial offer of $10-$11 a share to $9.40 a share after it conducted due diligence and Sun demanded assurances from IBM that it would complete the acquisition even if regulators challenged the deal. Additionally, the Times reports that the price change came after IBM’s lawyers discovered that payments to senior Sun employees were higher than anticipated.
It is uncertain if this is permanant or just part of the game. There’s always drama with big deals.
Both the Journal and the Times said Sun has no other offers waiting in the wings.