Asda has teamed up with Farmfoods in a move designed to add momentum to its £1.4bn bid to buy Iceland.
If the joint bid is successful, up to 200 Iceland stores would transfer to Farmfoods, with Asda hanging on to the remaining 600.
Competition requirements mean Morrisons, which is also looking to acquire the frozen specialist, would need to sell a similar number of stores to complete a deal.
It will reportedly offload stores in smaller batches to rivals including Tesco, Sainsbury’s, Waitrose and Lidl.
Also in the running to take over the chain are private equity giants Blackstone, Bain, TPG and BP Partners. Iceland chief executive Malcolm Walker, who retains a 23% stake in the chain he founded, is still regarded as the most likely winner.