'Wal-Mart's £2.8bn bid for Safeway'

Asda owner Wal-Mart is believed to be planning to buy Safeway in a deal worth up to £2.8billion that would put the UK chain on an equal footing with market leader Tesco.

Executives from Wal-Mart, the world's biggest retailer, have been holding secret meetings with the Office of Fair Trading, according to reports today.

A takeover would cut the number of big supermarket chains from four to three but the competition authorities have indicated they would allow Wal-Mart to go ahead, providing it sold some stores in areas where it would otherwise be too powerful.

Safeway now has about 10 per cent of the market while Asda has 15per cent and Tesco 23 per cent.