IBM could pay as much as $4bn for data analytics firm Splunk, according to a report from Bloomberg.
The report says that Oracle is also in the mix to buy the data analytics firm, creating the potential for a bidding war.
Splunk offers monitoring and analysis tools for mining insights from big data. The company went public last April.
According to Bloomberg, IBM is looking to bolster its data analytics services for machine generated data. If Splunk was acquired it would add to a growing staple of data analysis firms recently bought by IBM. The company acquired analytics firms Vivisimo and Varicent Software last year.
Charles King, principal analyst at Pund-IT, said the move makes perfect sense for IBM. King told V3 that Splunk's analytics offerings and IBM's goals for the future would make this a solid match for both companies.
"Splunk's focus on gathering [and] analysing machine-generated data with the intent of using that intelligence to improve business processes and decision making is right down IBM's alley technologically and could certainly fit into a range of the company's analytics solutions," said King.
"Just as importantly, the intent of Splunk's solutions is in line with what many if not most IBM enterprise customers hope to achieve with IT."
Despite the strong match, IBM isn't the only company said to be considering buying Splunk. Oracle is also reportedly thinking about making a move for the data analytics company.
Oracle has put a focus on data analytics within the last few years. The firm released a big data analytics appliance tool last January. Oracle's appliance came out despite comments from company president Mark Hurd who called most big data "worthless".
For Splunk the acquirement would be major news. The company was the first big data firm to go public.
The rumours of a purchase helped boost Splunk shares. When the news of the potential acquirement came down shares in the firm jumped eight percent.