Asda’s bid for Iceland warms up with Barcap

ASDA appears to have moved closer to a bid for frozen food chain Iceland by lining up backing from Barclays Capital.

It comes after Asda, Britain’s second-largest supermarket, brought on board advisers from Lazard in June to help it put together an offer.

Iceland’s current owner, the resolution committee of collapsed bank Landsbanki, needs to offload the budget chain.

Asda, owned by America’s Wal-Mart, will face competition, however, if it wants to complete another acquisition. Iceland founder Malcolm Walker, who currently owns 25 per cent the company, also wants to complete a takeover.

Walker has this year been in negotiations with several banks, including Goldman Sachs, for a £1.5bn loan that would allow him to buy the 67 per cent stake being auctioned off by the stricken Icelandic bank.

Asda, which said yesterday it does not comment on speculation, paid £778m for Netto in May last year but agreed to sell 47 shops after the Office of Fair Trading raised competition concerns.

Morrisons and several private equity firms are also thought to be interested in a bid for Iceland.