Burroughs closed in on Sperry on Friday, saying it has begun preliminary discussions with the rival mainframe computer maker about a "business combination."
The talks are the first reported since Burroughs announced on May 5 a $4.06-billion offer for Sperry in a bid to create the world's second-largest computer company.
Minutes before Burroughs' announcement, Sperry said it was conducting preliminary discussions about a possible business combination, but it would not say whether it was with Burroughs or another company.
Neither company said what was meant by a business combination. Burroughs spokesman James Kenyon specifically declined to say if that meant a merger.
The companies' statements tied in brevity: each was just 17 words long, and company spokesmen refused to elaborate on them.
Sperry stock on Friday climbed 25 cents a share to $73.50 in consolidated trading on the New York Stock Exchange. Burroughs fell $1 a share to $58.
A merger of Detroit-based Burroughs and New York-based Sperry would knock Digital Equipment out of second place behind International Business Machines in the ranks of the world's computer companies.
Burroughs launched a hostile tender offer for Sperry stock on May 8 after Sperry management failed to respond to its friendly "bear hug" three days earlier.