Ocado (OCDDY) shares surged to their highest level of the year Tuesday after reports of a possible tie-up with Marks & Spencer (MAKSY)  sent the struggling online grocer to the top of the FTSE 250.

Ocado shares gained more than 8.6% in early London trading to change hands at 272.60 pence. The stock has gained 14.3% over the past three months, compared with the 1.61% fall in the FTSE 350 Food & Drug Retailers Index.

British food and home retailer Marks & Spencer, known as M&S, is reported considering a launch of its online grocery business through a tie-up with online supermarket Ocado, Britain's Sunday Telegraph reported over the weekend.

The talks are said to be starting in the coming weeks. Last week, CEO Steve Rowe reportedly told managers that the retailer planned to launch a soft trial for online grocery delivery.

M&S has not yet launched an online delivery service like its major competitors -- Tesco (TSCDY) , Sainsbury's (JSAIY) , Morrisons (MRWSY) and Walmart's (WMT) - Get Report Asda -- saying that its customers tend to buy less items and it would therefore be uneconomical.

M&S is said to be weighing up its options, the Telegraph reported, including the possibility of partnering with another operator.

Ocado has suffered several blows in recent years, after Morrisons and privately held Waitrose renegotiated contracts, saying that they were too restrictive.

Morrisons, which still uses Ocado, also has a tie up with Amazon(AMZN) - Get Report that allows Prime customers to receive delivers within two hours in certain parts of the country.

The Telegraph said M&S is unlikely to sign a deal with Amazon as there is little evidence it has penetrated the U.K. grocery market.

M&S shares were up 0.05% by 09:00 BST to change hands at 366.70 pence, having gained 8.26% over the past three months.