Computing giant IBM is in talks to acquire Sun Microsystems in a cash deal worth $6.5 billion (£4.6 billion).

Acquiring Sun would give IBM a boost in the software, finance and telecoms markets, bolstering its position against Hewlett-Packard, the world's largest IT company. The deal would also strengthen IBM's influence on the internet.

If the merger went ahead, the two companies would be able to offer corporate computer systems independent of Microsoft's Windows software and Intel's microprocessor technologies.

The Wall Street Journal said the deal would involve IBM paying a 100% premium on Sun's $4.97-a-share closing price on Nasdaq yesterday. Sun, which reported a $209 million loss for its second quarter up to December, makes high-spec computers and software including the Java technology brand and Solaris operating system.

Sun's shares have slumped over the past year as the downturn has hit demand in the computing market.

Insiders say Sun approached several tech giants about a possible acquisition, including Hewlett-Packard, which turned it down.

If the deal goes ahead it will be the biggest in IBM's history, surpassing its acquisition of business software maker Cognos last year for $5 billion.

But it could be held up by regulatory hurdles. The two firms produce a number of competing products including software and storage systems, and President Obama's choice for the next anti-trust chief at the Department of Justice, Christine Varney, is believed to have a less open approach to big mergers.

The tech industry has seen a flurry of consolidation in recent years, with Hewlett-Packard, Cisco and Dell all expanding their portfolios.