Sainsbury's and Asda command shares of 15.8% and 15.6% respectively, which means the combined business would ring up more 31.4% of United Kingdom grocery sales. A further announcement will be made at 7am on Monday 30 April.
Sky News exclusively revealed on Saturday that the two companies are in negotiations about combining Wal-Mart's Asda business with Sainsbury's, in a deal that would send shockwaves through the entire British retail industry.
Asda did not return calls seeking comment.
Sainsbury's shares closed on Friday at 269 pence, giving the company an equity value of 6 billion pounds.
If concluded, a deal would be the most significant in the UK's food retailing sector since Wm Morrison bought Safeway to give it a UK-wide presence in 2004.
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Sainsbury's has reported three straight years of profit decline, and is forecast to report a fourth on Wednesday.
Monteyne says the two retailers have different fortes that will enable them to improve the other's performance: "Asda has been struggling in the United Kingdom to deal with both the threat of discounters and the growth of e-commerce, particularly in non-food", he says. "This (deal) provides a potential solution for Walmart to deliver a more profitable Asda in the long run", said Shore Capital analyst Clive Black.
The traditional high street has come under increasing pressure in recent years, with the growth in online retailers.
In January, Walmart appointed Chief Operating Officer Judith McKenna to run its worldwide unit with a remit that included fixing its United Kingdom operations.
Mike Coupe, the Sainsbury's chief executive, is said to have been a driving force behind the proposed merger.
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Higher yields can weigh on stocks, as bonds start to offer better returns than equities and push up borrowing costs for companies. Rhumbline Advisers holds 131,439 shares. 138384 shares traded on hands while it's an average volume stands with 86.43K shares.
Tesco last month moved to strengthen its grip on the United Kingdom food sector, completing the 4 billion-pound purchase of wholesaler Booker.
Sainsbury's already owns Argos while Asda's George clothing brand vies with Marks & Spencer and Primark to sell the most clothing in volume terms. Together they would have a share of 31.4 per cent, putting them ahead of current market leader Tesco which has a share of 27.6 per cent.
Before the deal can be given a green light, economists at the Competition and Markets Authority (CMA) are expected to spend months poring over a map of the combined group's store network.
"It's going to be a really big test of the CMA's understanding of the market and whether it believes that this deal is in the consumer's interest", said Shore Capital's Black.
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