Britain's Competition and Markets Authority (CMA) dealt a potentially fatal blow to the deal last month, saying its initial view was that the proposed 7.3 billion pound takeover of Asda by Britain's No. 2 supermarket group would be blocked without the sale of a large number of stores, or even one of the brands.

The supermarkets will also recalculate a key indicator of consumer harm using what they consider to be more realistic criteria, and submit another proposal for store sales, the FT reported, citing people briefed on the process.

Sainsbury's declined to comment, while Asda did not immediately respond to a request for comment on the FT report.

(Reporting by Noor Zainab Hussain in Bengaluru; Editing by Alexander Smith and Mark Potter)