Takeover activity in the supermarket sector developed on a second front yesterday after it emerged that Somerfield had received a tentative approach.

News of the interest from an unnamed party came as rival Safeway detailed the impact of a five-way bid battle on its business.

Morrisons, Asda, Tesco, Sainsbury's and Bhs entrepreneur Philip Green are all courting the UK's fourth largest supermarket chain in a takeover saga which has now lasted three months.

With the results of a regulatory review on four of the five potential bids not expected until August, Safeway said it faced "challenging circumstances".

The uncertainty has forced it to virtually halt a refit programme, while suppliers have expressed concern about the future ownership of the company.

Amid fears about staff morale, Safeway has also put in place an incentive scheme for staff, particularly at its head office in Hayes, west London. Despite the takeover distraction, the store said fourth quarter same store sales were only 0.1 per cent down on a year earlier and added full-year profits would be in line with market hopes.