Somerfield has already rejected one offer from Baugur

The bid group, which includes Apax Partners and Icelandic retail group Baugur, said all newspaper reports on the matter should be "disregarded".

Baugur had a �1bn ($1.9bn) offer turned down by Somerfield in February.

Asda said it does not comment on market speculation. Analysts say Bristol-based Somerfield is worth about �1.2bn.

Rival bidders

The Apax-led group said in its statement that "no remarks attributed to sources close to it were authorised by the consortium".

Other members of the consortium are Barclay Capital and Iranian property tycoon Robert Tchenguiz.

Also in the bid group are brothers Ian and Richard Livingstone, owners of London & Regional Properties.

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, which has the Kwik Save chain under its umbrella.

Analysts say Asda, which is owned by US giant Wal-Mart, would be pleased to purchase the larger Somerfield outlets.