Dell and storage company Compellent are in talks regarding a merger.
On Thursday, both companies issued statements that they have entered into an exclusive deal with one another to negotiate the acquisition of Compellent by Dell.
If the talks succeed, Dell will acquire all of Compellent's common stock at a price of $27.50 (£17.50) per share in cash.
"Compellent has offered a disruptive technology in the mid-range storage space, with a highly virtualised product," Forrester analyst Andrew Reichman wrote in a blog post. "They were the pioneers in block-level automated tiering, which is getting a great deal of attention from the big vendors like EMC, HDS, IBM and others."
In September Dell stepped out of a bidding war with rival HP over storage company 3Par. The company had been willing to pay $32 a share, but HP stumped up $33, and Dell did not want to match the bid.
"For Dell to make this deal successful, [it] will have to invest heavily in the roadmap of Compellent, to accelerate their path towards true enterprise capabilities," Reichman wrote.