O'Neill, who has yet to officially sign his two-year contract extension with the FAI, is believed to have spoken to the Premier League club about a return to club management, and his assistant Roy Keane has also been linked with the move.
Sanchez Flores is expected to fly to England this weekend and complete the formalities that will see his salary vastly increase even before performance-related bonuses, while Stoke have had a delegation in Barcelona for the last few days in order to convince him to take the post.
Flores was given only one season by Watford, despite guiding them to a 13th-place finish and an FA Cup semi-final.
Espanyol are already lining up former Malaga manager Javi Gracia to replace the 52 year-old, with sources at the club admitting that a change of head coach is imminent. They were 14th ahead of Thursday's match at Levante.
"He was very liked, and it's sad when someone loses their job".
"But as the week has gone on, we all know football - it's just a matter now of getting on with it and trying to prepare for the new manager coming in, making sure the players are in the right frame of mind, or the game on Monday, whichever it is (that comes first)". They will be a lucky manager. Obviously the owners want to make sure it's the right person, which can be hard.