Somerfield bidder Baugur is refusing to pull out of the race for the UK chain, despite the fact five senior staff are facing fraud charges.
According to the BBC, the Icelandic investment group dismissed reports it was pulling out of a consortium bid for Somerfield as “nonsense”.
Chief executive Jon Asgeir Johannesson along with four others face 40 charges related to fraud and breaches of accounting rules, Iceland police have said.
All five are denying the allegations and Baugur said it was business as usual. It claimed the charges were politically motivated.
The charges follow a three-year investigation by Icelandic authorities, which began with searches on Baugur's offices and included investigations in the Faroe Islands and Luxembourg.
Johannesson is said to own 70 per cent of the company, which has a number of retail and property investments across Europe.
Baugur, which also owns the Big Food Group, which includes the retailer Iceland, is part of a consortium in talks with Somerfield.
If the deal were to be successful, Baugur would become the fifth-biggest food retailer in the UK, with a share of about 7.6 per cent, behind Morrison, which bought Safeway in 2004.
Speculation is now mounting as to whether the charges could scupper the deal.
Bristol-based Somerfield, which includes the Kwik Save chain, is set to release its full-year results on Wednesday.
