Tobacco giants are in talks with P&H which could see them invest tens of millions of pounds into the wholesaler in return for a stake of the business.

JTI and Imperial are considering the move amid nervousness around the Tesco Booker merger and talks have taken on an “increasing urgency in recent weeks”, according to Sky News.

The news outlet also reported insiders have said Imperial Brands and JTI were each owed tens of millions of pounds by P&H, but insisted the tobacco manufacturers taking an equity stake in the wholesaler was only one of several options under consideration.

P&H is the one of the UK’s largest private companies and employs more than 4,000 people across the country with annual revenues of more than £4bn.

A spokesperson for P&H said: “As part of the planned refinancing process, we are in constructive discussions with our lenders and stakeholders. The company believes it is well placed to take advantage of the many opportunities that the market currently presents.”

Jeremy Blackburn, head of communications at JTI, said: "Palmer & Harvey is one of the key wholesalers of our products in the U.K. and we are currently in discussions with its management team to develop future business plans."

An Imperial spokesman said: “We are aware of P&H’s ongoing refinancing discussions and are talking with them about a range of potential options to support their business. It would be inappropriate to comment further.”