THE UK's largest supermarket chain Tesco joined the takeover battle for Safeway yesterday by revealing it is considering a bid for the business.

Chief executive Sir Terry Leahy said the group was lining up a part-cash, part-share deal that would prove compelling to Safeway shareholders.

Tesco is the sixth bidder to declare its interest in Safeway and its move adds another dimension to what is certain to prove an unprec- edented takeover battle.

Morrisons has agreed a deal while Sainsbury's, Wal-Mart, Bhs billionaire Philip Green and US venture capitalists Kohlberg Kravis Roberts are also planning bids.

Tesco is the market leader in the food retail sector and any offer would be likely to face intense scrutiny from competition authorities.

But Sir Terry said he believed Tesco should enter the fray given it was clear regulators were being asked to consider a shake-up of the sector.

He said: "We have watched the situation closely and thought a lot about it. What we could see was the authorities were being asked to consider a major restructuring of our industry, going from four national players to three.

"In these circumstances, it is important the Tesco case is heard."

David Stoddart, a retail analyst with Teather and Greenwood, said Tesco had nothing to lose and everything to gain by declaring its interest.

He said: "At best it may hope to succeed and, at worse, it gets to muddy the waters for the others.

"It is going to cost them a few million quid but it is a low-risk strategy for Tesco."

The City believes Morrisons would face the least opposition from competition authorities given that its bid would create a stronger fourth national player.

Morrisons is the only group to have made a formal bid for Safeway, agreeing a £2.9bn all-share deal with its board less than a fortnight ago.