Infielder Brandon Drury would go to Toronto along with Triple-A outfielder Billy McKinney in the deal, according to ESPN and multiple reports.
Happ is 10-6 with a 4.18 ERA in 114 innings pitched for the Blue Jays this season.
The Yankees are looking to bolster their starting pitching, and Happ has had success against the Red Sox, the Yankees’ chief rival in the American League East, with a 0.84 ERA in two starts against Boston this season. In his last outing against the Red Sox, he gave up five runs, including a grand slam to Mookie Betts, in a 6-4 loss, but the runs were unearned. He is 7-4 with a 2.98 ERA in his career against the Red Sox.
The Yankees and Red Sox play 10 more times this season.
Drury, who has played all of the infield positions this season, is batting .176 in 18 games in the majors.
McKinney has spent most of the season in the minors. In 62 games at three levels, he is hitting .230 with 13 home runs and 35 RBIs. He is currently at Triple-A Scranton Wilkes-Barre. McKinney was drafted in the first round (24th overall) of the 2013 draft by the Oakland Athletics. The Yankees acquired him from the Cubs in the trade that sent Aroldis Chapman to Chicago in 2016.