Two other groups are reported to be eyeing Somerfield

However, Somerfield added it was still in talks with other potential bidders.

Two groups are reportedly still in the running to buy Somerfield, which is expected to cost about �1.1bn ($2.1bn).

The groups are said to be a consortium including Icelandic retailer Baugur, while the other involves property tycoons Ian and Richard Livingstone.

Bid saga

We have had a look but have decided that it does not stack up for us United Co-operatives statement

The battle for Somerfield began earlier this year when the company rejected a �1bn takeover bid from Baugur.

The Somerfield group includes 664 Somerfield stores and 560 Kwik Save outlets.

In May, United Co-operatives said it was looking at making a bid because it believed a deal would make "sound commercial, operational and financial sense".

However, in a statement on Tuesday, United Co-op said it had decided not to proceed.

"We said at the outset that this was not a must-do deal for us. We have had a look but have decided that it does not stack up for us," it said.