£1bn bid for Somerfield

Supermarket group Somerfield said today it had received a £1 billion takeover approach from Baugur, the Iceland-based group that has already pulled off a string of other deals on the UK high street.

Supermarket group Somerfield said today it had received a £1 billion takeover approach from Baugur, the Iceland-based group that has already pulled off a string of other deals on the UK high street.

The Bristol-based company, which owns the Kwik-Save chain, said it was investigating the proposed offer, which was priced at 190p a share.

Baugur, which already owns womenswear stores including Karen Millen and Coast, is days away from completing the takeover of Iceland chain from Big Food Group.

Analysts had been expecting a Somerfield bid from Baugur as it would enable the Icelandic company to bolster the operation of the Big Food Group business, which it has agreed to buy for around £326 million.

Baugur, which has also acquired Hamleys and Goldsmiths in recent months, will have an estimated turnover of £6.8 billion following the Big Food deal - equivalent to Iceland's gross domestic product. It is also expected to have 50,000 employees and 2,400 shops.

The company's strategy involves working alongside existing management teams, a tactic that Somerfield said had been applied to the latest approach.

The supermarket chain also said the offer was subject to a number of pre-conditions, including the undertaking of due diligence, financing and agreement on the funding of pension schemes.

Somerfield said: "The board is investigating this approach. There can be no certainty that an offer will be forthcoming. The board will make a further announcement in due course."