TAKEOVER target Somerfield was yesterday urged by shareholders not to accept a cut-price offer.

The comments in the Financial Times came as hopes began to fade that the supermarket group would be the subject of a two-way bidding war.

The Bristol-based company has been the subject of takeover talk for most of the year and is still in talks with two parties - one including Apax Partners, Barclays Capital and property tycoon Robert Tchenguiz, and the other involving Japanese bank Nomura and property group London Regional.

Analysts expect an offer of less than 220p a share - valuing the FTSE 250 Index company at less than £1.2bn.

Mark Webster, of State Street Global Advisors, which owns about three per cent of Somerfield, said he would have to consider the merits of a bid that was less than 220p a share.

He said: "It looks unlikely that the highest consensus expectation will be met, but I am happy to back management in this case and would prefer them to walk away rather than sell the company too cheaply."

The process has taken longer than expected after talks were delayed by the withdrawal of Baugur, the Icelandic investment group, from the Apax-led consortium.

Paul Smiddy, an analyst at Robert W Baird, said last week that the lack of a bid "may indicate a further notch down in the eventual offer".

He said: "We now believe that it is unlikely that an aggressive two-way battle for the company will be fought."

The retailer, which operates 1,300 stores under the Somerfield and Kwik Save brands, rejected a £1bn takeover offer from Baugur in February.