LONDON Sainsbury's (SBRY.L), Britain's second largest supermarket group, is in the early stages of examining a takeover bid for tobacco distributor Palmer & Harvey, Sky News reported.
It cited unspecified sources as saying that while Sainsbury's was exploring a bid there was no certainty it would proceed with an offer.
A spokeswoman for Sainsbury's declined to comment, while nobody was immediately available for comment at Palmer & Harvey.
Palmer & Harvey is a major distributor of tobacco products to Tesco (TSCO.L), Britain's biggest retailer which in January agreed a 3.7 billion pound ($4.8 billion) takeover of wholesaler Booker (BOK.L).
Last year Sainsbury's acquired Argos-owner Home Retail for 1.1 billion pounds.
(Reporting by James Davey, Editing by Paul Sandle)