Sun Microsystems has announced that it will be buying the popular open source database company, MySQL, for $1 billion – $800 million in cash for MySQL stock and about $200 million in options. The deal is expected to close near the end of Sun’s fiscal third quarter, which ends in late March, or early in its fourth quarter.

Sun said MySQL will be integrated into the company’s Software, Sales and Service organizations, and will gain distribution through all of Sun’s channels. The acquisition is a bold move for Sun that will put the company head to head against rivals Microsoft, IBM and Oracle in the $15 billion database market and bring with it big customers including Google, Yahoo, Facebook, and Nokia. It will also help Sun give further support to the LAMP software platform comprised of Linux, Apache, MySQL and PHP/Perl.