IBM in talks to buy Sun Micro: report

That would translate into a premium of about 100 percent over Sun's closing price Tuesday of $4.97 a share on the Nasdaq, the paper said, citing people familiar with the matter.

Sun could not be immediately be reached for comment by Reuters. An IBM (IBM.NY)spokesman in Bangalore declined to comment when reached by Reuters.

In recent months, Sun has approached a number of large tech companies in the hopes of being acquired, the paper said. HP declined the offer, the paper said, citing a person briefed on the matter.

International Business Machines Corp and Sun compete in the market of supplying servers that power corporate computer systems.

The top five server vendors, including IBM, HP and Sun, posted declines in their fourth-quarter server revenue, according to figures from market researcher IDC released in February.

Sun, whose name stands for Stanford University Network, rose to prominence in the 1990s when tiny start-ups flocked to buy its high-end computers, which run on its Solaris operating system and have long been widely used in the financial services industry.

When the Internet bubble burst in 2000-01, funding for start-ups dried up along with much of the demand for Sun's computers.

Sun stock is down 71 percent in the last 52 weeks, a far cry from an all-time high of $258.75 that it touched during the dot-com boom.

(Reporting by S. John Tilak, additional reporting by Ajay Kamalakaran, editing by Tiffany Wu and Hans Peters)