Asda is understood to have lined up backing from Barclays Capital to beef up its finances to bid for Iceland stores.

According to the Sunday Times, Asda has lined up the financing after bringing advisers Lazard on board in July.

The information memorandum is likely to go out within the next two weeks for the 67% Landsbanki stake and all the big grocers are expected to take a look. Morrisons is thought to be most keen on a bid.

Asda chief executive Andy Clarke has said previously however that he would only be interested in cherry picking stores from the portfolio.

The bidders will face competition from Iceland founder Malcolm Walker and his management team, which already own 23% of the business.