Image copyright
Getty Images
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.
The deal seems to suggest the end of Ocado's current one with Waitrose, which was due to expire next year.
That agreement also gives Ocado the right to use the Waitrose brands on its website and on its fleet of more than 700 vans.
Chief executive Tim Steiner said earlier this month that arrangement prevented it from supplying own label products from another leading UK grocery retailer.
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 in the UK, as well as delivering its own branded goods.