In a statement UK-based cybersecurity firm Avast Plc said, it was in advanced talks over a potential merger with NortonLifeLock Inc.
If the negotiations are a success, it will result in a cash-and-share deal, said Avast.
The company however cautioned thar there is no certainty that a deal will be agreed.
Late on Wednesday, NortonLifeLock confirmed that it was in discussion with Avast regarding a possible combination.
Avast, which makes free and paid security software for desktop and mobile devices under the Avast and AVG brands, has a market capitalization of $7.21 billion (5.20 billion pounds).
The potential deal would help Tempe, Arizona-based NortonLifeLock, which primarily deals with consumer cyber safety, expand its focus to consumer software.
Previously NortonLifeLock was known as Symantec Corp, before it sold its enterprise-security business to Broadcom in 2019. It currently sells Norton antivirus software and LifeLock identity-theft-protection products for home and work use.
With the news reaching the market, shares of NortonLifeLock slumped by 4%.
($1 = 0.7217 pounds)