Somerfield is the latest UK retailer to attract takeover attention

One group is being led by Iranian property tycoon Robert Tchenguiz; the other is said to involve UK property investors Ian and Richard Livingstone.

Icelandic retail group Baugur may have returned to the fray after a �1bn offer was turned down earlier this year.

Somerfield shares have climbed as speculation about a buyout increased.

Talking turkey

"The Board has decided to enter into discussions with the potential offerors with a view to establishing whether the proposals could be developed on a basis which would result in a formal offer at a price which could be recommended by the Board of Somerfield", the company said in a statement.

However, it warned that "there can be no certainty that an offer will be made nor as to the terms on which any offer might be made".

According to Reuters, sources familiar with the situation said that the Livingstone brothers were considering raising an initial �1bn offer for Somerfield.

The group led by Mr Tchenguiz, which includes finance firms Barclays Capital and Apax, have made an offer of close to �1.1bn, Reuters said.

Baugur already owns 5% of Somerfield and is thought to be keen to merge the operations of Big Food group, which it bought last year, with the Somerfield group.