Woolworths reported flat festive sales

Apax said "considerations are at a very early stage", and added that any eventual bid was not yet certain.

Woolworths recently reported flat sales for the Christmas period, a result it described as "disappointing".

It said the poor festive performance was partly down to the difficult toy market and piracy hitting DVD sales.

Wary consumers

Apax said in a statement that "if a decision to proceed is made, it is currently Apax's intention to approach the board of Woolworths to seek a recommendation".

They're (Apax is) looking at it at a time when management credibility has been slightly damaged by the Christmas outcome Nick Bubb, Retail analyst Check Woolworths' share price

It added that a further announcement would be made when appropriate.

"Woolworths Group has no comment to make at this time. We're monitoring the situation closely," the retailer said in a statement.

Private equity firms have bought a number of UK retailers in recent years, taking advantage of low borrowing costs to buy businesses which have started to struggle amid a slowdown in consumer spending growth.

"They're (Apax is) looking at it at a time when management credibility has been slightly damaged by the Christmas outcome," said Nick Bubb, retail analyst at Evolution Securities.

Portfolio of investments

Hilary Cook, at Barclays Stockbrokers, said Woolworths had been one of the companies she had forecast would be taken over this year.

"Its shares have under-performed and it is a cash generative business. It might as well be private," she added.

WOOLWORTHS FACTS The first Woolworths store opened in Liverpool in 1909 In the early 1980s it was bought by Paternoster Stores, the forerunner of Kingfisher It first traded as a listed company in 2001 after its demerger from Kingfisher Woolworths has more than 800 High Street stores, 21 big W outlets and 85 MVC music retail stores

Woolworths is expected to post pre-tax profits of �68m ($128m) this year, against �66.8m last time.

Founded more than 100 years ago, the retailer demerged from Kingfisher in 2001.

Apax was one of the two private equity firms which recently sold DIY retail chain Wickes to builders' merchant Travis Perkins for �950m.

It was also part of the consortium that bought out UK women's fashion group New Look last year.

The private equity group has investments in more than 335 companies around the world.