TWO of the UK's biggest media companies are involved in talks that could lead to the creation of a £3 billion media giant, it emerged today.

Publishing group United Business Media (UBM) has approached conference organiser and publisher Informa about an all-share merger that would catapult the combined company into the FTSE 100.

Talks are at a very early stage and it is not known who would lead the enlarged group if a deal goes ahead, but it is speculated that Informa's chief executive Peter Rigby could become chairman, while UBM's David Levin could be chief executive.

The news comes at a time when media groups are coming under increasing pressure from the economic slowdown, which is likely to lead to falling advertising revenues.

It is thought that a tie-up between the two companies would lead to considerable cost savings, while the relative lack of overlap between their operations means a potential deal is unlikely to trigger competition issues.

Informa released a statement today saying: "The Board of Informa plc notes the recent press speculation and confirms that it has received an approach from United Business Media plc about a possible all-share merger.

"The Board of Informa is considering the proposal and is in preliminary discussions with UBM. There can be no certainty that any transaction will take place."

UBM, which employs more than 5,000 staff in 30 different countries, currently has a market capitalisation of £1.5 billion.

The group produces more than 200 magazines, newspapers and directories, including titles such as Property Week and Travel Trade Gazette, as well as running more than 200 websites and 300 events.

Its continuing business made operating profits of £176 million during 2007, on revenues of more than £800 million, although revenues were hit by the weak dollar.

Informa is the world's largest listed conference organiser, and also publishes titles such as the shipping industry bible Lloyd's List.

It has made a series of major acquisitions in recent years, including market analyst Datamonitor in 2007, and has a market capitalisation of £1.6 billion.

Shares in the group, which closed at 386.25p on Friday, have risen in recent weeks on the back of rumours that a number of private equity firms were considering making an offer for it.

A merger between the two groups would give UBM access to the events market in Asia and the Middle East, an area where it has recently been expanding its presence.

UBM, whose shares closed at 605.75p on Friday, could not be contacted to comment.