Sainsbury’s hopes of acquiring Argos owner Home Retail Group hang in the balance because the retailers cannot agree a price.

Sources close to the situation said talks had stalled following the disagreement. Sainsbury’s is understood to be unwilling to pay more than 150p per share, which would value Home Retail Group at £1.22bn.

But Home Retail Group is not prepared to sell for less than 170p per share, the Financial Times reported.

The gap in the two valuations does not bode well for the grocer, which has until 5pm on Tuesday to table a formal offer for the business.

However, sources said that representatives from the two businesses remain in contact and suggested a breakthrough could come early next week.

Yesterday Sainsbury’s spoke out on the stance of its largest shareholder, the Qatar Investment Authority (QIA), following media reports that it was set to back its move for the Argos owner.

Sainsbury’s said: “We understand that the QIA is not the source of these articles and has not yet taken a final position on the proposed Home Retail Group transaction.

“Like any other shareholder the QIA would consider any such proposal in detail before making a final decision on its position.”

Earlier this month Home Retail agreed a £340m deal to sell its Homebase business to Australian retailer Wesfarmers, seemingly paving the way for Sainsbury’s to acquire Argos.

The supermarket giant always had its sights firmly set on Argos rather than Homebase, which was barely mentioned in a 22-page presentation it unveiled to investors and journalists two weeks ago.