SUPERMARKET group Somerfield is the subject of a £1 billion takeover bid from an Iceland-based company.

The group, which owns 20 Hampshire stores employing hundreds of staff, said it was investigating the proposed offer, which was priced at 190p a share.

The Bristol-based company, which owns the Kwik Save chain, was approached by Iceland's Baugur, which has already pulled off a string of other deals on the UK high street.

Baugur already owns womenswear stores including Karen Millen and Coast and, ironically, is days away from completing the takeover of the frozen food specialist Iceland chain from Big Food Group.

Somerfield, which is the UK's sixth largest supermarket chain and was formerly known as Gateway, has been involved in a battle to win back market share after hitting problems integrating Kwik Save.

The bid has been expected as the firm moves to bolster its £326m buyout of Iceland.

Baugur, which has also acquired Hamleys and Goldsmiths in recent months, will have an estimated turnover of £6.8 billion following the Big Food deal - equivalent to Iceland's gross domestic product. It is also expected to have 50,000 employees and 2,400 shops.

The company's strategy involves working alongside existing management teams, a tactic that Somerfield said had been applied to the latest approach.

Somerfield said: "The board is investigating this approach. There can be no certainty that an offer will be forthcoming. The board will make a further announcement in due course."

Somerfield was last in the bid spotlight in 2003, when it rejected a £594m approach from retail entrepreneurs John Lovering and Bob Mackenzie.