Italian businessman Giampaolo Pozzo has owned Udinese since 1986 and his family bought Spanish team Granada three years ago.
The board of directors, acting on behalf of Watford Football Club, is pleased to confirm that agreement has been reached in principle for the transfer of ownership to the Pozzo family," a statement on the club's official website announced.
"Representatives from the family have been in discussions with Watford Football Club and both parties have agreed initial terms."
Based just north of London in the county of Hertfordshire, Watford were in the Premier League in 2006-07 but were relegated after just one season and have been in the Championship since.
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