Iceland chief executive Malcolm Walker will not submit a first-round bid for the supermarket chain.
The move could mean that there is no first-round bid for all of the estate.
Iceland’s majority shareholder, the liquidators of defunct Icelandic bank Landsbanki, hopes to dispose of its 67% stake.
Walker is expected to reserve his right to enter the race until a later stage according to The Sunday Telegraph.
The Iceland founder can fall back on a clause in its shareholder agreement which means he only has to match the highest big from a rival in order to win.
He is expected to wait and see who enters the bidding process before submitting his offer.