Asda is reportedly in talks with administrators Deloitte to buy HMV.

According to an unnamed City source cited by The Sun on Tuesday, Asda is not looking to convert HMV’s stores into supermarkets but rather is interested in the chain as both a brand and a business. A source who spoke to The Grocer confirmed this rumour to be correct.

Rival supermarket Morrisons has already snapped up six of HMV’s stores with a view to expanding their convenience store business M-local.

At time of its collapse in January 2013 HMV operated 223 stores with 4,000 employees. To date Deloitte has confirmed 103 stores for closure and axed 1,500 jobs.

Asda will face strong competition from the restructuring specialist Hilco, which brought the music chain’s £176m debt in the week following its collapse for a reported £40m.

Digital sales of films, music and videogames hit the £1bn mark in the UK in 2012 with sales of CDs, DVDs, Blu-ray and video games falling by 17.6%.

Asda, which is owned by US giant Walmart, already sells entertainment products in its stores. It opened Disney stores in three of its largest superstores in autumn 2012.

According to a statement from Deloitte “a number of parties are involved in discussions” with a decision expected to be made before the next quarterly rent payment on HMV’s stores is due to be paid, expected to be on the traditional due date of 25 March.

Hilco and Asda declined to comment.