The Mail on Sunday reported that KKR has hired Conservative MP and former Asda chief executive Archie Norman to look into the possibility of making an offer for the retailer, citing unnamed sources.

The report comes amid speculation that Sainsbury is ripe for a takeover after suffering a sharp decline in sales over past year.

Sainsbury, once the UK's biggest grocer, slipped to third position earlier this year after being leapfrogged by Asda.

The British supermarket sector, squeezed by cutthroat competition and cramped by tough planning regulations which make it harder to open new stores, is currently undergoing a wave of consolidation.

Strategic purchase

Safeway, the country's fourth biggest supermarket chain, has been up for sale since January, with fifth-ranked Morrison's tipped as the most likely buyer after competition watchdogs barred Tesco, Asda and Sainsbury from bidding.

KKR specialises in buying underperforming businesses and turning them around.

In the 1980s, it pioneered so-called leveraged buyouts, where businesses are bought using money borrowed against their assets.

KKR's most high profile deals include the 1989 acquisition of food and tobacco giant RJR Nabisco, at the time the biggest takeover in US corporate history.

Three years earlier, it had bought US supermarket chain Safeway before quickly spinning off its British operation.

KKR expressed an interest in buying the British Safeway chain earlier this year, but decided not to proceed.