Baugur has confirmed it has pulled out of the consortium which is in talks to buy Somerfield after six of its senior executives, including chief executive Jon Asgeir Johannesson, were faced with fraud charges.
All six from the Icelandic group deny any wrong-doing over the group’s attempts to buy Arcadia in 2002.
The other members of the consortium - Barclays Capital and property tycoon Robert Tchenguiz - have stated their intention to continue the bid for Somerfield without Baugur, which is selling the shares it already owns in the multiple to Tchenguiz. The consortium is vying with another bid headed by brothers Ian and Richard Livingstone. United Co-op pulled out of a potential auction when its adviser said the risks were too great.

Somerfield chief executive Steve Beck said significant progress had been made by interested parties and that discussions had now reached an advanced stage. But he added: “There can be no certainty at this time that an offer for the group will be forthcoming.”

Announcing full-year results to April 30, Beck said pre-tax operating profit was up 63% at £66.4m while pre-tax profit rose 63% to £53.1m. However, in the nine weeks of the new financial year to July 2, there was a 2.7% drop in like-for-like sales.

Beck said the company had made significant progress in delivering a quality, fresh, convenience-based offering. He said: “The further growth of our business will be led by the convenience stores division. Our smaller stores are performing well and delivering a strong fresh offer.”

In the past year, Somerfield has withdrawn Kwik Save from Scotland. It now has 494 Kwik Save stores across the UK and 814 Somerfield stores. Scotland will be a particular emphasis for the Somerfield brand after the chain doubled its Scottish presence to 178 stores in the past year.