UK news agency Reuters has confirmed it is in takeover talks with Canadian data company Thomson about a possible bid worth £8.8bn ($17.5bn).
Reuters is one of the world's best-known news agencies
Thomson has been expanding its non-data business, and Reuters would complement its US news operations and European AFX News wire service, analysts said.
Other firms are also mulling mergers. Last week, Rupert Murdoch's News Corp bid $5bn (£2.5bn) for Dow Jones.
News of the talks sent Reuters' shares as much as 7% higher in London.
The stock had surged by 25% on Friday, amid speculation that Reuters was the target of a takeover.
By early afternoon trading in London the shares had shed most of their gains and were 2.75 pence, or 0.5%, higher at 618.5p.
A merger between Thomson and Reuters would make sense, as the Canadian company has the cash to finance a takeover and already has a news and financial data operation, analysts said.
Brokerage Numis Securities said that while Thomson's move could spark another bid for Reuters, the Canadian firm was the best fit for a takeover.
They added that by combining operations, Thomson and Reuters would be better placed to take on their rival Bloomberg.
The three companies compete against each other in the "terminal" market, providing news and financial data on stocks, currencies and bonds to banks, traders and brokerages.
Industry figures released in April, estimated that Bloomberg had a 33% share of the terminal market, with Reuters controlling 23% and Thomson 11%.
Reuters said in its statement on Tuesday that both it and Thomson "believe there is a powerful and compelling logic for the combination which would create a global leader in the business-to-business information markets".
More than four-fifths of Thomson's earnings come from its North American operations, while Reuters, which also has a large presence in the US, generates more than half its earnings in Europe.
Reuters said that it expected a merger to help save the two companies more than $500m (£250m) a year.
However, both companies were keen to stress that there was no certainty a formal offer would be tabled, despite the talks.
Should the offer from Thomson become official and be accepted, the new company would be called Thomson-Reuters.
The companies would merge the Thomson Financial business and Reuters' financial and media operations under the Reuters name.
Following a merger, Reuters boss Tom Glocer would head the new firm, while Thomson's president and chief executive, Richard Harrington, would retire.
Reuters said it had given details of the talks because of the speculation that had boosted its share price and because "both boards thought that it was in the shareholders' interests to clarify the status of the discussions".
It added that Thomson had offered 352.5 pence in cash plus 0.16 of Thomson shares for every Reuters share.
According to Reuters, that valued the UK-based news agency's shares at between 697p and 705p, about 40% more than their current market price.
Any prospective takeover of Reuters would have to win the backing of the Reuters Founder Share Company.
The group, run by 15 trustees, holds a single golden share in the company, giving it the power to block any hostile takeover of the firm.
"It should be emphasised that discussions are at a stage where there can be no assurance that agreement will be reached," Reuters said.
"No transaction will be announced without the support of the Reuters Founders Share Company," it added.