According to sources close the situation, Trinity, which last year bought the Thomson regional newspapers south of the border, is eager to expand further, and has been eyeing the Scottish titles for a considerable time.
Caledonian had originally planned a flotation, which was postponed on Thursday to allow the company to consider the two bids.
It is believed the current management of Caledonian would prefer to remain independent, but investment bank Fleming, which owns 57 per cent, is eager to exit.
It is also understood that STV is willing to pay pounds 120m in cash, which Fleming had been eager to ensure.
STV's 20 per cent shareholder, Mirror Group, publishes the Daily Record and the Mail and is believed to be prepared to co-operate with Caledonian on printing, administration and back-office activities in the event that STV's bid for Caledonian succeeds. Mirror Group, which also owns 46 per cent of the Independent, is a champion of the "collegiate" approach to publishing.
But sources at STV argued yesterday that a merger of STV and Caledonian would make sense even without the link to the Mirror Group. Caledonian's advertising is roughly 90 per cent local and 10 per cent national, while STV's split is approximately the reverse.
Sources close to the negotiations said last night that Caledonian and STV had been in discussions since April, even as the publisher was preparing its flotation.
That "dual track" approach was abandoned when it became apparent that the flotation would not generate as high an exit price as Fleming had been hoping.
It is expected that the discussions with the two bidders will continue for the better part of two weeks. Analysts predicted STV would win the race, with one saying, "Scottish is clearly the leading contender".
Separately, it emerged yesterday that Flextech, which also holds 20 per cent of STV, could offer shares to Pearson in exchange for Pearson's minority holding in Flextech's UK Gold and UK Living cable channels. The deal is believed to be similar to one being discussed with Flextech's other commercial shareholder, Cox Communications.Reuse content