Netscape Communications and America Online (AOL) have said they were "in negotiations" over a stock-for-stock merger deal, but that no agreement had been reached.

Both companies have significant operations in the Republic. AOL, in partnership with Germany's Bertelsmann group, has based its customer service centre for Germany, France and Britain in Dublin, with more than 400 employees. It recently announced an expansion of this operation to Waterford, where it expects to hire a further 150 people.

Netscape, based in the Citywest business park in Dublin, currently employs 40 people. Last year, the company said its workforce would extend to 300 jobs within three years. The operation covers software development, telesales, distribution, technical support, administration and finance.

Industry sources said there appeared to be little overlap between the Irish operations of the two companies, suggesting there would be few if any redundancies in the event of a merger.