"We can confirm that representatives of His Highness Sheikh Khaled Bin Zayed Al Nahyan are in discussions with Mike Ashley and his team, about the proposed acquisition of Newcastle United Football Club," read the statement.
"We view it as an honour to have the opportunity to build on the strong support, history and tradition of the club.
"We have agreed terms and are working hard to complete the transaction at the earliest opportunity."
The newspaper said that Newcastle had confirmed to them that the discussions were genuine.
British media reports have said the sale price could be around 350 million pounds.
Newcastle United and Sheikh Khaled did not immediately respond to requests for comment from Reuters.
Ashley, who bought a controlling stake in the Premier League club in 2007, has in the past tried to sell the club.
The owner of British sportswear retailer Sports Direct International Plc said last October that he had not received any acceptable offers for Newcastle, a year after he officially put the club up for sale, but told Sky News in December that talks on a deal had made promising progress.
Any potential buyer of the club must be able to provide transfer funds, he had said at the time.
Sheikh Khaled, the cousin of Manchester City owner and Arab billionaire Sheikh Mansour bin Zayed Al Nahyan, previously failed in his bid to buy Liverpool Football Club for 2 billion pounds last year, the Daily Mail has previously reported.
Sheikh Khaled is also the founder of Bin Zayed Group, a leading conglomerate with diverse business interests in the local and international markets.
(Reporting by Bhargav Acharya in Bengaluru and Simon Evans; Editing by Susan Thomas and Toby Davis)
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