Scottish Radio Holdings is expected to put a formal offer to Ireland on Sunday shortly to buy the title in a deal worth close to £8 million (€10 million). The Scottish company, which already has media interests in Ireland - including a shareholding in Today FM - will offer shares in its company in return for full control of the newspaper. The move would mark Scottish Radio Holdings' first major move into the print media in the Republic. It bought the Leitrim Observer for £1 million in 1998, but may be interested in further expansion.

The move would also help Ireland on Sunday (IoS) build its position in Ireland and capitalise on the Scottish group's printing plant in Northern Ireland to boost its printing output.

The company owns Morton's Newspapers in Northern Ireland and has an advanced printing press in Portadown, Co Armagh. IoS is said to sell around 12,000 copies a week in the North and believes it can increase this.

IoS has been performing well lately and saw its circulation rise from 63,470 over July-December 1998 to 70,500 in July-December 1999. It is understood that the company is losing around £300,000 a year and that 80,000 copies per week would be its break-even point.

The editor, Mr Liam Hayes, told staff yesterday that the deal was not finalised. He is also reported to have said that ICC Venture Capital would be happy to remain on board and future financing was not a problem. ICC invested £1.5 million in the paper in a deal last year.

Ireland on Sunday executives refused to comment last night. A report in yesterday's Business & Finance magazine suggested the deal would be an all-share transaction. Some sources said some of the BES investors - said to have invested around £1 million - would be keen to realise cash. However, for some shareholders, Scottish Radio shares would be attractive.

"They are a well-run, well-managed company," said one source. Scottish Radio's shares closed yesterday at £15.38 sterling, down 22p on the day. Company executives were unavailable for comment.