Advanced discussions are said to be underway in regard to a £260m all-share merger which would create one of the most powerful forces in the US market.
Sky News reports that the tie-up has been precipitated by a need to focus firepower on the likes of Google and Facebook which have established themselves as the firms to beat in the fast-growing video ad market.
While the deal has yet to be formally approved it is expected that it will take the form of an all-share takeover of RhythmOne by Taptica, whose shareholders will command a majority stake in a combined entity with revenues of around $700m.
Going forward the merged group will retain the Taptica name, with Taptica US head Ofer Druker overseeing its operations.
In coming together it is thought that the pair will be able to achieve significant savings by trimming duplicated roles while also presenting new opportunities through increased scale.
Subject to shareholder approval the merger could be confirmed later this week.
A wave of consolidation in the sector has seen RhythmOne swallow YuMe in a 2017 deal valued at $185m.