It is understood that the big four grocer is in advanced discussions with Greybull Capital is looking to acquire Morrisons’ set of convenience stores, which trade under the name M Local.

The sale would see the group take control of the roughly 150 convenience stores operated by the supermarket chain under the M Local brand.

Morrisons has already closed 23 convenience stores, leaving around 160 to form part of any sell-off package.

Other parties had shown interest in the stores, but Morrisons is now in exclusive talks with Greybull.

Dalton Philips was ousted from the business earlier this year and replaced by former Tesco director David Potts, who instantly set about making hundreds of redundancies in head office in order to increase the head count on the shop floor.

Morrisons is to offload its smaller convenience stores, following a succession of talks with private equity firms.

The retailer has also written down the value of its supermarkets by £1.3bn. Phillips led the business into online operations and its convenience stores, but one industry insider said that the high-street stores were “losing a packet” because of “monster rents on suburban high streets”.

Greybull rescued Monarch from bankruptcy last year with a £125 million takeover deal. It is run by brothers Marc and Nathaniel Meyohas.

Morrisons declined to comment on the story.