The bidding war which propelled Morrisons back into the FTSE 100 is expected to end in an auction “this month”.
The Takeover Panel plans to end the supermarket’s “great uncertainty” through talks with the Morrisons board and the two potential buyers.
A four-month battle has waged since private equity firm Clayton, Dubilier & Rice made a 230p-a-share bid in June.
Majestic Wine-owner Fortress responded with two higher offers, before its rival returned to the fray with a 285p bid last month.
“The panel will shortly be speaking to various parties ready for an auction in the middle of this month,” a source told the Daily Mail.
“Having such an extended offer period creates great uncertainty for the company.”
An auction would likely give both companies up to five days to bid, with the highest offer recommended by the board at a shareholder vote.
However, the auction could be scrapped if Fortress decides to abandon the bidding war.
The company is said to be “considering its options” following Clayton, Dubilier & Rice’s £7 billion proposal in August.
Analysts have said the buyer will find it difficult to make an acceptable return without substantial asset sales, which both firms have suggested they are against.
The prospect of a higher bid means Morrisons, seen as the smallest of the Big 4, could become Britain’s second-largest supermarket by market capitalisation.
Its £7.02billion valuation has taken it under a percentage point behind Sainsbury’s, which was worth £2 billion more just three months ago.