Such brinkmanship isn't uncommon during late-stage negotiations, the paper noted, and the companies may yet resume talks. But for now, the stance between them was described as "confrontational."

IBM and Sun were first reported to be in merger talks two-and-a-half weeks ago. Neither company has confirmed or denied that any discussions are under way.

IBM has conducted its due diligence of Sun and found nothing that would prevent it from buying the company, the Journal said.

If the companies fail to make a deal, it is unclear whether another large vendor will step in and bid for Sun. After IBM first expressed its interest in an acquisition, Sun's investment bankers shopped the company around to most large IT vendors over the winter to see if any others were interested, the Journal said, but none were.

That puts Sun in a tough position, said Dan Olds, principal analyst at Gabriel Consulting Group. With no other suitor likely to step forward, Sun will probably have to accept an offer from IBM eventually, even if it means swallowing less favorable terms, he said.