The board of Somerfield has rejected a takeover proposal, valuing the Bristol-based supermarket group at £510m.
Somerfield 'Solid strategy'
The conditional approach from retail entrepreneurs John Lovering and Bob
Mackenzie "substantially undervalues" the group, a statement said.
Chairman John von Spreckelsen added: "The board considers that the price
indicated fails to reflect the value of the business.
"Somerfield has strong brands in KwikSave and Somerfield, a solid strategy
for delivering value to shareholders and excellent prospects."
The statement from Somerfield said the vote against the 103p a share offer
from Mr Lovering and Mr Mackenzie had been unanimous.
Mr Lovering, chairman of value retailer Peacocks, confirmed last week
that he and Mr Mackenzie - former chief executive of National Car Parks - were behind the approach to Somerfield.
Investors, who have seen Somerfield shares surge from 74p to 92.75p since the
bid interest became known, will now be awaiting the response of Mr Lovering and
his consortium to Wednesday's rejection.