Regional publisher Johnston Press confirmed it is in advanced talks to buy cut-price national daily newspaper i for around £24m.
Johnston, which owns more than 200 titles including the Yorkshire Post and The Scotsman, said the deal would create the UK's fourth largest print publisher with more than 600,000 paid copies a day.
The i newspaper is part of the group that publishes The Independent and Independent on Sunday, which is owned by Evgeny Lebedev, who has other media assets including the Evening Standard and local TV station London Live.
News of the "late stage" discussions comes after it was revealed the title had been put up for sale at the end of last year.
A sale of the i raises questions over the future of The Independent and Independent on Sunday, as it has been key in turning around the loss-making newspaper group.
The i was launched in October 2010 with a cover price of 20p, although it has since doubled to 40p.
It was billed at the time as the UK's first quality daily newspaper to launch since 1986, when sister title The Independent hit the streets.
Its launch came less than a year after the Lebedev family, led by businessman Alexander and his publisher son Evgeny, bought The Independent from Irish publisher Independent News and Media for £1 in March 2010.
The i is said to have been a success for the Lebedevs, selling 275,000 copies a day.
It made underlying earnings of £5.2m in the year to the end of September, according to Johnston.
Shares in Johnston rose four per cent on news of the talks.
The group said there are opportunities to launch new online products associated with the i, target new markets and for advertising cross-selling. Johnston added the i has growing circulation revenues - a feat in a declining wider print publishing market.
It is understood that Daily Mirror publisher Trinity Mirror was initially interested in buying the i, but is now said to be considering launching its own cut-price daily tabloid.
A deal to buy the i would be seen as a coup for Ashley Highfield, chief executive of Johnston, who recently cheered investors after cutting the group's pension deficit.
Johnston has been under pressure recently as growing digital advertising revenues have struggled to offset declining circulation and print advertising.