Compaq is in talks to buy UB Networks following the withdrawal of Newbridge Networks' bid last week.
It was revealed the PC giant originally started negotiations to buy UB Networks before Newbridge made its bid.
A source at Newbridge said the firm had been ready to move to the due diligence stage with Tandem-owned UB Networks last week, but instead withdrew its offer.
It is believed that some of UB Networks' technology licences are owned by Compaq through its acquisition of Networth last November.
Another source said: 'Compaq was in the picture with UB before Newbridge's bid stirred things up. It would be the best fit, because of the shared technology and Compaq's need for a higher-end network offering.'
Compaq networking products division manager Ian Whiting admitted the firm had approached UB Networks when it was put up for sale in July.
'Discussions have been ongoing, but I can't comment on what stage they are at,' he said. 'The acquisition would give us access to a higher-end which we don't have - such as ATM.'
UB Networks has said it wants to be bought by a computer company rather than by a network specialist.
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