Media reports have said that the parent companies of the two regional publishers are in talks to pool their local newspaper titles into a new business headed by former Mirror Group chief executive David Montgomery.
Trinity Mirror has confirmed it is also involved in the talks, with a view to buying a minority stake in the proposed new firm, although it has not yet made an offer.
The move could see a new company formed called Local World, in which Iliffe parent company the Yattendon Group would be a founder shareholder.
Both Northcliffe and Iliffe have confirmed that talks over their futures are taking place but no deal has yet been finalised.
It is thought Northcliffe has been valued at around £100m and its parent company DMGT would retain a minority stake in the new business.
A statement from DMGT said: “In response to media speculation, DMGT confirms that it is currently in talks regarding the future of Northcliffe Media.
“No deal or transaction has been agreed, but if these talks move to the point where agreement is reached, an announcement will be made to the market.”
The Financial Times reports that the under the proposed deal “Yattendon would take equity in the new company in exchange for all its newspapers and DMGT would maintain a minority stake as well as receiving some money upfront.”
A spokeswoman for the Yattendon Group told HTFP: “In response to recent press speculation, I can confirm that Yattendon Group has held preliminary discussions with David Montgomery about becoming founder shareholders in a new local media company.
“We have a shared vision about the long term opportunities for local media but at this stage there is no certainty whether these discussions will lead to a satisfactory conclusion.”
It is understood that Montgomery would also have a stake in the new company, which is expected to receive financial backing from a number of banks.
A statement from Trinity Mirror said: “Trinity Mirror plc can confirm it is in discussions towards taking a minority interest in a new company comprising the assets of Northcliffe Media, a division of DMGT plc and Iliffe News & Media, a division of Yattendon Group plc.
“No offer has been made and there is nothing further to report at this stage.”
There has been speculation over the last few years that Northcliffe Media would be sold off and in February last year DMGT chief executive Martin Morgan said the company was “open to any worthwhile approaches concerning consolidation”.
Northcliffe was put up for sale by DMGT in 2005 but later taken off the market after the bids failed to match the company’s valuation of the business.
Iliffe News and Media owns three daily newspapers including the Cambridge News, along with 25 weekly newspapers plus two Sunday newspapers and four monthly glossy magazines.