Shares in Big Food Group have leapt more than 13 per cent after the group revealed it is in negotiations over a £378 million takeover.

Big Food, owner of the Iceland frozen food chain and Booker cash-and-carry, has not named its suitor, but the offer is potentially worth 110p a share.

The City rumour mill has come up with a rapid solution, however, with Icelandic retailer Baugur, which already owns a 22 per cent stake in BFG, topping the list having got rid of its 10 per cent slice of House of Fraser earlier this week.

Baugur is yet to respond to its rumoured interest.

BFG registered a 35 per cent hike in full year pre-tax profits in May, but profits at Iceland have been slipping in the midst of the retail market war. The next trading statement - scheduled for October 13 - is expected to be weak.

• Baugur was confirmed on Saturday as the interested party.

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