Following two unsuccessful approaches, IAG is understood to have proposed a deal that values its rival at 300 crowns per share, which represents a 32% premium to Friday’s closing price.
The news comes after IAG said on Friday that it was not expecting to announce a bid to buy Norwegian soon and ruled out a hostile offer.
In April, IAG disclosed that it had bought a 4.61% stake in Norwegian with a view to make a full offer for the airline.
"The minority investment is intended to establish a position from which to initiate discussions with Norwegian, including the possibility of a full offer for Norwegian," IAG said at the time.
In early afternoon trading in London, IAG shares were 0.6% higher at 687p.
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