The City has gone back on red alert as bid speculation surrounding three of the top UK food retailers resurfaced.

The rumour mill has sprung into action once more after the future ownership of Sainsbury's, Somerfield and Marks & Spencer became the subject of more conjecture.

Sainsbury's fourth largest shareholder Lord David Sainsbury was responsible for renewed talk about his family's plans for the UK's third largest supermarket chain. Through his trust, The Gatsby Charitable Foundation, Lord Sainsbury sold 45 million shares in the business on Tuesday, at a value of £130m, bringing his share of the company down from 23 per cent to 21 per cent.

He is still by far the major shareholder in his family, with Tim Sainsbury (six per cent), John Sainsbury (four per cent) and Simon Sainsbury (three per cent) behind him.

Ex-Asda duo Archie Norman and Allan Leighton are rumoured to be weighing up a bid for the chain, while other potential suitors are said to be Permira, Carrefour and Bhs owner Philip Green. Sainsbury's ceo Justin King has already taken steps to defend the group from any unwelcome bidders, and the word in the City is that anyone who has a go, will need to have a good deal of perseverance.

Green meanwhile has been busy denying any resurrection of his long-standing interest in M&S. The billionaire tycoon pulled out of a £9bn offer last year and has counted out another swoop in the next six months.

He said: "It is distracting for me and it is distracting for them", before citing the added competition in the UK high street as a reason for his dimmed interest.

Somerfield of course is subject of a rumoured takeover offer already, from Icelandic giant Baugur. But speculation now surrounds a possible rival £1.2bn bid from Robert and Vincent Tchenguiz, property magnates.

Somerfield's board is still in talks about whether to open its books to its Icelandic suitor, but an offer at this level from the Tchenguiz camp would up the ante by 30p a share for the ailing Bristol-based retailer.

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