IBM in Talks to Buy Sun Micro: Report

IBM could pay $6.5 billion to acquire Sun Microsystems. if the deal does go through it could happen as early as this week, a report says.
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IBM

(IBM) - Get Report

is in talks to buy

Sun Microsystems

(JAVA)

, the

Wall Street Journal

reports, citing people familiar with the matter.

A combination of the two companies would bolster IBM's heft on the Internet, in software and in finance and telecommunications markets, the

Journal

notes.

Talks are under way, but people familiar with the matter said a transaction might not occur and the talks could end without a deal being reached. An IBM spokesman declined to comment for the

Journal

, while a spokesman for Sun didn't return calls requesting comment.

If a deal does go through, which could happen as early as this week, IBM is likely to pay at least $6.5 billion in cash to acquire Sun. That would be a premium of more than 100% over Sun's closing price Tuesday of $4.97, the newspaper reports.

Both companies make computer systems for corporate customers that aren't reliant on

Microsoft's

(MSFT) - Get Report

Windows software, and their product lines are less dependent than rivals' on

Intel's

(INTC) - Get Report

microprocessor technologies, the

Journal

notes. The two companies are also strong supporters of open-source Linux and Java software.

Sun has approached a number of large tech companies recently in the hopes of being acquired, the

Journal

reports.

Hewlett-Packard

(HPQ) - Get Report

declined the offer, said a person briefed on the matter. A spokesman for

Dell

(DELL) - Get Report

declined to comment.

The

Journal

says any transaction would strengthen IBM's position against rival H-P. It could be the largest acquisition in IBM's history, surpassing the acquisition of

Cognos

last year, according to the newspaper.