Morrisons is rumoured to be lining up a bid for online grocer Ocado as it seeks to compete with its rivals' internet-based shopping ventures.

According to the Daily Mail, shares in Ocado rose 4.1 per cent to £1.45 on Thursday, 25 November on speculation that Wm Morrison Supermarkets was preparing to make an all-cash takeover bid for the company.

Ocado, which is partly owned by the pension fund of Waitrose's parent company the John Lewis Partnership, has enjoyed strong sales growth during the past couple of years, although it has never actually recorded a profit since its launch in 2002.

Last month, the online retailer exchanged contracts to acquire a 14ha site in central England, on which it plans to build a 32,500m2 distribution centre, doubling its existing capacity.

Ocado was floated on the London Stock Exchange on 21 July 2010.