Sun Microsystems Inc., in order to add a server appliance offering to its server portfolio, announced Tuesday that it will acquire Cobalt Networks Inc. in a stock-for-stock merger valued at US$2 billion.

Mountain View, Calif.-based Cobalt supplies server appliances, such as its Cobalt Qube, Cobalt Cache, Cobalt RaQ and Cobalt NASRaQ to businesses, ISPs (Internet service providers) and educational institutions for Web hosting. These appliances deliver network-based services.