The board of copier maker Xerox discussed the possibility Tuesday, people familiar with the matter told the Journal.
CNBC reported Wednesday that Xerox has made a cash-and-stock offer for HP.
HP, which makes computers and printers, is more than three times the size of Xerox and any bid would be at a premium to its current stock price of $18.40, the people said. HP is the second biggest printer maker behind China's Lenovo. HP has begun a restructuring under its new CEO, Enrique Lores, who took over the top role Nov. 1.
Xerox has a market cap of $8.05 billion.
A combination of Xerox and HP Inc. could result in annual cost savings of $2 billion, the people told the Journal.
Earlier this week, Xerox agreed to sell its 25% stake in the Fuji Xerox venture to Fujifilm and will receive proceeds of $2.3 billion. It also announced the dismissal of a lawsuit of more than $1 billion filed against it by Fujifilm, the Journal noted.
Xerox also has received an informal funding commitment from a major bank, known as a "highly confident letter," the people told the Journal.
Xerox sharesrose 2.34% to $37.22. HP rose 10% to $20.24.