IBM in Talks to Buy Sun in Bid to Add To Web Heft

International Business Machines is in talks to buy Sun Microsystems in a combination that would bolster IBM's heft on the Internet, in data storage and in government and telecommunications areas, according to people familiar with the matter. The two companies have a common interest in that both make computer systems for corporate customers that aren't reliant on Microsoft's Windows software or Intel's microprocessor technologies. The two companies are also strong supporters of open-source Linux and Java software for Web application development. It is unclear whether the negotiations will result in a transaction, but if the deal does go through, IBM is likely to pay at least $6.5 billion in cash to acquire Sun, the people said. That would translate into a premium of about 100% over Sun's closing price Tuesday. The deal would bolster IBM's position as the world's largest server maker. According to analysis firm IDC, IBM had 31.4% of the market last year; H-P was second with 29.5%, and Dell third with 11.6%. Sun ranked fourth, at 10.6%.