Baugur and Iranian property tycoon Robert Tchenguiz confirmed earlier this year they are discussing a deal with Somerfield.

BBC: NEWS | Business | Baugur still eyes Somerfield bid

One report suggested that Baugur had already offered to withdraw from the consortium.

BBC: NEWS | Business | Baugur still eyes Somerfield bid

Baugur's UK retail presence also includes fashion chains Karen Millen, Oasis and Whistles, jewellery stores Goldsmiths, and London toy shop Hamleys.

BBC: NEWS | Business | Baugur still eyes Somerfield bid

If the deal were to be successful, Baugur would become the fifth-biggest food retailer in the UK, with a share of about 7.6%, behind Morrison, which bought Safeway in 2004.

BBC: NEWS | Business | Baugur still eyes Somerfield bid

Retail entrepreneur Tom Hunter and Icelandic group Baugur sold their combined 21% stake in House of Fraser on 13 September, raising speculation that other UK retail groups could now be bid targets.

BBC: NEWS | Business | Sales boost for House of Fraser

Baugur already owns 5% of Somerfield and is thought to be keen to merge the operations of Big Food group, which it bought last year, with the Somerfield group, which has the Kwik Save chain under its umbrella.

BBC: NEWS | Business | Baugur still eyes Somerfield bid