London-listed video advertisers Taptica and Rhythm One to unite in £260m merger

Merger talks between two firms in the video advertising sector have reached an advanced stage, which could be valued at £260m.

London-listed firms Taptica and Rhythm One are in discussions regarding an all-share tie-up, which would see Taptica take over its competitor, according to a report by Sky News.

Taptica shareholders would own a slightly larger stake in the newly formed company, despite having a lower market capitalisation than Rhythm One.

Sources told Sky News that the new business would have roughly $700m (£532.6m) in revenue, half of which would be generated from video advertising. Taptica's US head Ofer Druker would run the combined group under Taptica's name, as Rhythm One does not currently have a permanent chief executive.

The deal is expected to be announced later this week. Both Taptica and Rhythm One did not immediately respond to requests for comment.

Taptica had hinted earlier this month that it was in discussions with a "potential acquisition target", but did not specify whether this was Rhythm One.

Taptica and Rhythm One were valued at £115m and £147m respectively as of today's market close.