Sun Microsystems

Sun Microsystems, the maker of Java software, a person briefed on the discussions told The New York Times on Wednesday. Shares of Sun soared 61 percent in European trading following reports that a deal could be in the works. I.B.M. is considering an all-cash deal of close to $7 billion, which would represent a substantial premium for Sun, whose market capitalization was about $3.7 billion at the close of trading Tuesday. Sun’s investors include the private equity firm Kohlberg Kravis Roberts.

The talks between I.B.M. and Sun were previously reported in The Wall Street Journal. In recent months, Sun has approached a number of large tech companies in the hopes of being acquired, The Journal said. Hewlett-Packard declined the offer, the paper said. WSJ's Digits blog writes that Big Blue's interest in Sun comes down to control of a $100 billion market, "the data center—the large computer rooms that keep businesses and the Internet running."

In a story that is just breaking this morning, the Wall Street Journal reports that IBM is in early stage talks to buy Sun Microsystems "in a combination that would bolster IBM's heft on the Internet, in software and in finance and telecommunications markets." The WSJ's sources caution that the talks could yet fall through, but, these same sources add, there is also a chance the negotiations could be wrapped up as early as this week.