The store confirmed this week that a proposal had been made on April 11 and in a statement issued by the store, is 'subject to a number of conditions and it is uncertain whether an offer will ultimately be made. A further announcement will be made when appropriate.' However speculation in the press and on the internet centred on a possible £500m offer from a consortium including retail executive John Lovering who is a former chairman of DIY chain Homebase and Odeon Cinemas.

Shares in Somerfield, which also owns the Kwik Save chain, rose 23 per cent to close at 91p at the end of business on April 15. This gave the store a price tag of £455 million.

But the frantic trading in Somerfield shares which began at he end of last week has led the Financial Services Authority to look into dealings. Executive chairman John von Spreckelsen purchased 100,000 shares at 70p each last Thursday.

A rival offer from one of the Safeway bidders is now thought to be unlikely although those that miss out Safeway may want to pick up elements of a broken up Somerfield which has some 1,400 stores in its portfolio.

Meanwhile, Safeway has announced a 'resilient' trading performance in the fourth quarter ended March 29 as directors claimed that the uncertainty surrounding its future has not had a major impact on its performance over the past three months.

Total sales have grown by 0.8 per cent during the period with like-for-like sales dipping 0.1 per cent against an increase of 0.1 per cent in the previous quarter.

Overall, however, the store's second half trading has been slightly affected despite support from most of the store's suppliers. Profit before tax this year is likely to around £335million before exceptional items and this is within the range of market forecasts.

And a loyalty bonus for key staff has been introduced to try and persuade them to see the bid battle out to its conclusion.

Topics