Asda has teamed up with the Scottish frozen supermarket chain Farmfoods in its £1.4bn bid for Iceland, it is understood.
Asda and Morrisons have both made offers for Iceland and it is understood the two grocers’ bids are at the top end of the £1.3bn to £1.5bn price range.
Both supermarkets will have to sell about 200 of Iceland’s stores to avoid competition hurdles.
The newspaper reports that the supermarkets are bidding against private equity firms Bain, Blackstone, TPG, and BC Partners.
As the bidding process proceeds into the second round, Iceland’s founder Malcolm Walker will need to confirm his own bid. Walker and the Iceland management team own 23% of the business.
He opted not to bid in the first round. Walker only has to match the highest bidder to win the auction due to a clause in his share agreement.