Morrisons is preparing a £1.5bn bid for frozen food retailer Iceland, it has been reported.

An acquisition would nearly triple the number of Morrisons stores and take its market share to within a whisker of Asda and Sainsbury’s.

It would also give Morrisons a boost in the southeast, and a large convenience store network – both of which are key priorities for chief executive Dalton Philips.

According to the Sunday Times, a handful of investment banks took part in a beauty parade last week to advise Morrisons on its planned bid. The contest was presided over by finance director Richard Pennycook and strategy director Gordon Mowat.

The winding up officials of failed Icelandic bank Landsbanki have put their stake up for sale.

Asda is also thought to be seriously considering a bid, and may be close to appointing advisers. Sainsbury’s is thought to be only interested in a handful of stores.

Morrisons faces competition for Iceland from its founder Malcolm Walker, who also plans to make an offer. Together with its senior management, he has a 23% stake and the right to match any bid. Walker is being advised by Rothschild.

The sale process will start in September.

Private equity firms Apax, Lion Capital and BC Partners are also thought to have expressed an interest in making a bid for Iceland.

Any supermarket chain that buys Iceland will face regulatory scrutiny.

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