The private equity owners of Somerfield have started exclusive talks with Co-op and hope to seal a deal to sell the UK’s fifth largest supermarket chain at close to their £2bn target valuation by next week. Financial Times

The mutually owned Co-op supermarket group has made the only bid for Somerfield.

Its initial offer of about £1.7bn left Somerfield’s private equity owners cold but a revised offer at the end of last week has since allowed talks to resume.

It is thought the consortium that owns Somerfield - made up of Apax Partners, Barclays Capital, Robert Tchenguiz and Kaupthing bank - is unwilling to sell the supermarket group for anything less than £1.9bn.