Retail giants J Sainsbury and Boots have denied they are planning a multi-billion-pound merger.
The supermarket and chemist were responding to press speculation that they are locked in talks about a possible joint venture.
This represents the first step towards a full-blown merger, says a report in The Observer.
Although both groups confirm they are in discussions about a joint venture, they add a possible merger has not been part of the talks.
Under the proposed deal, Boots will operate a shop-within-a-shop at some of Sainsbury's biggest stores.
Boots says the two are discussing "the opportunity for a limited number of store-based trials", and that it hopes to make a further announcement shortly.
The chemist adds, however, "a merger has not been part of these discussions".
Sainsbury confirms the two are in talks but refuses to comment further, other than to say it agrees with the statement issued by Boots.
PA