Marks and Spencer (M&S) and Ocado have confirmed they are “in discussions” about a £1.8bn joint venture.
Shares in both companies jumped on the news about the deal, which would give M&S a food delivery service for the first time.
The London Evening Standard said any deal would see M&S pay Ocado between £800-900m for a 50% stake.
M&S said there was no certainty the discussions would result in any agreement.
Shares in M&S were up 3% on the news while Ocado was up 10%.
Currently Ocado has delivery deals with both Waitrose and Morrisons, as well as delivering its own branded goods.