Somerfield snubs £1bn offer from Baugur

Somerfield dismissed a putative £1.03bn takeover approach from Baugur yesterday, refusing to open its books for the Icelandic giant that recently acquired Big Food Group.

But the supermarket chain stopped short of formally rejecting the 190p-a-share approach, appearing to leave the door open for Baugur to return. Shares in Somerfield barely moved, dipping just 0.75p to 187.25p.

Despite seeking "further clarification" from Baugur on a number of the Icelandic group's preconditions, Somerfield said its board had concluded that there could be "no certainty that this proposal would deliver a formal offer to shareholders at an appropriate level".

It added: "The board decided, therefore, that it would not be in the interests of shareholders to give further consideration to this proposal or comply with the stated preconditions." One of Baugur's main stipulations was that Somerfield's management - led by John von Spreckelson, the executive chairman - would run the business.

Baugur, a 5 per cent shareholder in Somerfield, was understood to be surprised by the response, which came after detailed negotiations between both parties' advisers. It is likely to seek further talks with Somerfield's board.

It is the second time in less than two years that Somerfield has spurned a takeover approach. In 2003 it rejected a £594m bid from the retail entrepreneurs John Lovering and Bob Mackenzie.

Separately, Somerfield said it had struck a sale-and-leaseback deal with Palmer Capital Partners, a venture capital property fund, over 140 petrol stations it is planning to buy from ChevronTexaco. Palmer Capital will provide about £90m in cash and Somerfield will manage the sites.