Asda is thought to have engaged investment bank Lazard to advise it on a potential £2.5 billion bid for Somerfield, according to The Times.

The UK’s second-biggest grocer is understood to be considering either an outright acquisition of Somerfield or purchasing a number of its 900 stores. Industry sources believe the latter option is more likely.

Previously, Asda chief executive Andy Bond said he would consider launching a convenience store chain, but Somerfield’s average store size of 7,000 sq ft would require a radical change in Asda’s distribution and product pricing strategy.

The Wal-Mart-owned grocer is keen to close the gap on Tesco, which has more than a 31 per cent share of the market, compared with its 16.7 per cent. Waitrose has been the only grocer to admit interest in Somerfield's store portfolio, but Morrisons, Sainsbury's, the Co-operative Group or Marks & Spencer could also throw their hats into the ring.

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