IBM is in advanced talks to acquire rival Sun Microsystems for roughly $6.5bn (€4.8bn) in cash , in a deal that could mark the start of wider consolidation in the technology industry as the recession shakes out weaker companies.

The acquisition would enable IBM, one of a handful of cash-rich companies to navigate the downturn so far largely unscathed, to cut costs sharply and bolster its computer hardware business in the slow-growing server market.