Morrisons will buy McColl's stores and save 16,000 jobs after the firm announced its administration last week.
The convenience store chain has over 1,100 outlets across England, Scotland and Wales.
McColl's employs around 16,000 staff, or roughly 6,000 full-time.
But the firm announced it had to go into administration last week "to preserve the future of the business and to protect the interests of employees".
But after emergency rescue talks over the weekend, Morrisons has agreed to buy McColl's for an undisclosed amount.
Morrisons will also protect the pensions of all McColl's workers.
The supermarket chain already runs hundreds of McColl's stores, which are branded as Morrisons Daily.
It's also a major supplier to McColl's, and provides products under the Safeway brand.
The supermarket saw off competition from the EG Group to buy McColl's.
The EG Group is owned by the billionaire Issa brothers, who own Asda.
Professional services firm PwC is handling the administration and is expected to make a formal announcement about the rescue deal today.
Morrisons is buying McColl's as a pre-pack administration and will acquire the chain as soon as it enters insolvency proceedings today.
As well as McColl's stores, the company also runs Martin's newsagents.
The firm has 755 McColl's stores, 270 called Morrisons Daily, 116 Martin's and eight called RS McColl, the latter all in Scotland.
It has Post Office counters in a third of its 1,100 branches.
McColl's says 5million Brits visit one of its shops every week - around 7% of us.
McColl's is understood to have been in discussions with potential lenders to shore up the business for several months, after it struggled during the pandemic due to supply chain issues, inflation and a heavy debt burden.
Morrisons was initially lined up to rescue McColl's before it went into administration last week.
It made a bid for the convenience store chain last week, but it was rejected.
David Potts, Morrisons Chief Executive, said: “Although we are disappointed that the business was put into administration, we believe this is a good outcome for McColl’s and all its stakeholders.
“This transaction offers stability and continuity for the McColl’s business and, in particular, a better outcome for its colleagues and pensioners.
“We all look forward to welcoming many new colleagues into the Morrisons business and to building on the proven strength of the Morrisons Daily format.”
McColl's raised £30million from shareholders in a cash call just seven months ago.
The firm was founded in 1901 as a single store, in Scotland, by footballer Robert Smyth.
It became a retail group in 1973 and floated on the London Stock Exchange in January 2014.
Last week McColl's was set to have its shares suspended from the London Stock Exchange as bosses said they would be unable to get its accounts signed off by auditors in time.
