Sainsbury's has abandoned initial talks regarding a multibillion-pound tie-up with private equity-backed Morrisons, the Financial Times reported, citing unnamed sources.
The exploratory dialogue took place between November 2025 and February 2026 before Sainsbury's opted to discontinue discussions.
While active negotiations are not presently occurring, individuals familiar with the matter did not rule out reopening talks at a later stage.
Securing regulatory approval would almost certainly require Sainsbury's to offload store locations, with the Competition and Markets Authority (CMA) expected to scrutinise any transaction thoroughly.
In 2019, the CMA prevented Sainsbury's £7.3bn ($9.64bn) takeover attempt of Asda after finding that the move would diminish competition and inflate consumer pricing.
Merging has become politically sensitive following a subsequent spike in food inflation, which drew heightened scrutiny to grocery prices.
Morrisons has ceded significant ground following its £10bn debt-inclusive takeover by Clayton Dubilier & Rice in 2021.
That transaction loaded £7.5bn of liabilities onto the grocer's balance sheet as borrowing costs escalated steeply.
Concurrently, Sainsbury's chief executive Simon Roberts has advanced his strategy to refocus operations purely on food.
The retailer has withdrawn from banking and recently reached an agreement to divest Argos, its general merchandise division.
Sainsbury's estate comprises upwards of 600 supermarkets and nearly 900 convenience shops.
Morrisons manages approximately 500 supermarket sites alongside over 1,700 convenience outlets, of which roughly 700 operate under franchise agreements.
Sector rivalry has also sharpened as discounters Aldi and Lidl continuously expand their physical presence, capturing a combined 19.3% share of grocery revenue.
Aldi has replaced Morrisons within the “big four”, the report noted.
Both discount chains are now categorised as “large grocery retailers” by the CMA and the Groceries Code Adjudicator, an updated classification that industry figures anticipate will influence future evaluations of any supermarket tie-up.
