Sky's Sources have said that an announcement could be made as early as Monday, or even sooner if the two sides are forced to accelerate their public disclosures.
Sainsbury's confirmed on Saturday that it and Walmart, the world's largest retailer, were in advanced discussions regarding a combination of the Sainsbury's and Asda businesses, the UK's No. 2 and 3 United Kingdom grocers.
Asda which is a centuries old British retailer which was purchased by Walmart for £6.7 billion in 1999, could be sold to Sainbury's as part of the group's plans to consolidate costs and challenge the market dominance of Tesco.
If the merger happens it would be biggest shake-up in United Kingdom grocery retailing since Morrisons took over Safeway in 2004.
A combination of Sainsbury's, the UK's second-largest grocer, with No. 3 Asda could push the combined company past Tesco.
Asda has about a 15.6% share of the United Kingdom grocery market, Kantar estimates, a figure that has been steadily eroding for the past two years, while Sainsbury's has around 15.8%.More news: Indu Malhotra takes oath as Supreme Court judge
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In January, Walmart appointed Chief Operating Officer Judith McKenna to run its global unit with a remit that included fixing its United Kingdom operations.
Roger Burnley, who took over as Asda CEO in January, is a former Sainsbury's executive, working under Coupe.
Tesco last month moved to strengthen its grip on the United Kingdom food sector, completing the 4 billion-pound purchase of wholesaler Booker. In April 2016, it announced a £1.4 billion takeover of Argos, which led to better than expected results the following Christmas.
The retailer is reportedly selling its majority stake in the grocery chain, Asda Group, to rival grocer J Sainsbury and take a 40 percent stake in the new entity, according to the Wall Street Journal. The Walmart division is favoured by shoppers on tight budgets, while Sainsbury's appeals to a more affluent crowd. Together, they would move ahead of Tesco, with 31.4 per cent of the market.
"The unconditional clearance by the CMA of Tesco/Booker gobsmacked everybody", said Shore Capital analyst Clive Black.