AT&T (T), one of SoftLayer’s customers, sparked the buyout talks but is no longer involved in the bidding battle, Reuters reported.
SoftLayer, which is majority owned by GI Partners, said it does not "comment on rumor or speculation."
Based in Dallas, SoftLayer was founded in 2005 and today is the world’s largest privately owned web hosting service.
Two recent acquisitions in this space topped $1 billion: CenturyLink (CTL) acquired managed hosting and colocation provider Savvis for $2.5 billion and Verizon Communications (VZ) shelled out $1.4 billion for IT services company Terremark Worldwide.
Shares of IBM were unchanged at $215.80 Friday morning, while EMC dropped 0.82% to $25.41.