Supermarket giant Morrisons is said to be moving closer to a £1.5 billion deal that could triple the size of its stores network and bring its market share nearer to larger rivals.

The Bradford-based retailer is reportedly in discussions with investment banks about advising on a takeover of frozen food chain Iceland in a move that would also boost its presence in the south east.

A successful bid would see Morrisons, the UK’s fourth largest supermarket, raise its market share closer to Asda and Sainsbury's, the second and third largest supermarkets behind Tesco. Iceland has been put up for sale by officials winding up Landsbanki, the failed Icelandic bank that took control of the chain in 2008. The sale process is set to start in September.

Morrisons chief executive Dalton Philips has already unveiled plans to boost the chain’s position in internet and convenience store shopping and a move for Iceland would boost the latter. The group is due to open three trial local shops, including one in Ilkley, this summer.

However, Morrisons is likely to face competition from its rivals with both Asda and Sainsbury reportedly interested in at least bidding for a small number of Iceland stores.

Mr Philips has outlined plans to move Morrisons into new markets and has paid £70 million for online baby products business Kiddicare.

The supermarket group has also taken a stake in Fresh Direct, an online grocer based in New York.

Buying Iceland would increase Morrisons’ market share from 12 per cent to 14 per cent, just two per cent below Sainsbury’s at 16 per cent. Tesco is market leader with around 30 per cent.

Iceland has 750 stores across the UK, mainly on the high street. Morrisons has 442 stores.

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