CiaoWeb, Italy's fourth largest Internet company, is controlled by Turin-based industrial conglomerate Fiat.
Terra officials reportedly said that talks were "very close to completion." A spokesman for Fiat didn't return phone calls seeking comment.
"Nothing is finalized, but this deal would confirm what we already know that a period of consolidation is helping the Italian market mature quickly," says Mario Bertolotti, an Internet consultant.
Though details about the deal have not been published, it would add another major player to Italy's increasingly crowded Internet sector.
The sector is already dominated by Sardiniabased Tiscali, Rome's Tin.it and Milan-based Jumpy.it. Though Tiscali is independent, its rivals are part of bigger companies: Tin.it is the Internet arm of telephone company Telecom Italia and Jumpy.it is part of Fininvest, a holding company controlled by billionaire media mogul Silvio Berlusconi.
Once a pending set of mergers go through, Tiscali and Tin.it will join Terra among the leading Internet companies in Europe. That would mean that among the continent's leading Internet firms only Germany's TOnline, the Internet unit of Deutsche Telekom, would be absent from the Italian market.
Copyright November 2000, Crain Communications Inc.