A group consisting of Texas Pacific, CVC and Permira are thought to be finalising plans for a £6bn (€8.64bn) takeover bid of the ailing grocery chain, but according to The Observer newspaper no formal approach has yet been made.
The impending offer comes as the Bradford-based retailer claims it is back on track after taking 2005's £313m profit loss on the chin.
Morrison's recently posted a six per cent rise in sales for the 16 weeks to 21 May, causing many analysts to believe a series of senior executive appointments and the announcement of a three-year recovery plan are alleviating the pressure of a difficult year.
Earlier this year financial difficulties led to the resignation of chairman Sir Ken Morrison. The appointment of Marc Bolland from Heineken into the role has seen day-to-day responsibilities pass from Sir Ken ahead of his official departure in early 2008, raising optimism among city investors.
But the firm has a long way to go before it can put last year's events behind it, and is still considered a legitimate buy-out target.
Senior research analyst at Verdict Research, Gavin Rothwell, told FoodandDrinkEurope.com: "The central problem for Morrisons was its acquisition of Safeway, it was a much bigger task than they anticipated. They didn't really get the handle on the way Safeway was run."
"This was the biggest deal in the sector which makes it a unique case. With an acquisition of this scale there would inevitably be dual running costs for a period."
"However, Morrison's key downfall was the failure to get a handle on what the Safeway customer wants. Safeway's customers are known to be more affluent than the typical Morrisons customer, something that the company failed to address in its stores."
Earlier this year Morrison's reported it's first ever loss - for the 12 months to 29 January - a result of £374m in one-off costs and write-offs. Profit for the year totalled £61.5m compared with £332m a year ago. The company's net debt currently stands at £1.15bn.
Morrison's is Britain's fourth largest retailer and currently holds a 12.5 per cent market share according to the latest figures released by TNS Superpanel.