Helguson, 27, was a key figure in helping the Hornets to avoid relegation from the Championship last season. The Icelandic international scored 20 goals including four in the last five games.
Championship winners Sunderland are believed to have had a bid of £1 million rejected by Watford and indiciations are that Pardew will make a higher offer to Watford over the weekend.
Another name linked with a move to the Boleyn ground is former Man Utd goalkeeper Roy Carroll. Carroll was handed a free transfer from Manchester after rejecting a £20,000 per-week contract.