The news confirms the veracity of reports earlier this week that Hutchison Whampoa was in talks with Telefonica over a deal.
The Three parent has filed a regulatory announcement to the Hong Kong stock exchange.
Hutchison Whampoa, which is owned by Li Ka-shing, said negotiations would take several weeks.
The deal would mark further consolidation in the mobile market after BT entered exclusive talks to acquire EE for £12.5bn towards the end of last year. It was thought O2 was BT's original acquisition target
It is unclear whether or not regulators would clear the acquisition, since a merged O2 and Three would create the biggest mobile network in the UK.
Hutchison Whampoa said in its regulatory announcement: "The board of directors of the company would like to inform its shareholders and potential investors that the Hutchison Whampoa Group has agreed to enter into exclusive negotiations with Telefónica, over a period of several weeks for the potential acquisition by the Hutchison Whampoa Group of Telefónica, S.A.’s UK subsidiary, O2 UK, for an indicative price in cash of £9.25bn…"
It added that the sum would be paid "at closing and deferred upside interest sharing payments of up to a further £1bn in the aggregate payable after the cumulative cashflow of the combined businesses of Hutchison 3G UK and O2 UK has reached an agreed threshold".
An O2 spokesperson added: "Three is known for campaigning on behalf of its customers, much like O2. We are confident that an agreement will mutually benefit the customers of both companies, as well as drive better value, quality and investment in one of the most digitally competitive countries in the world."