Malcolm Walker, who is fronting a consortium led by Baugur, the Icelandic investment group, offered £50m for the stores last month. The offer was rejected by the retailer.
Ardeshir Naghshineh, the property investor and organic farmer, has built a 10.2 per cent stake in Woolworths and last week said he supported the board's rejection of the offer from Mr Walker.
The intentions of Mr Naghshineh are unclear and it is possible that Baugur and Mr Walker could find an alternative structure that would satisfy the entrepreneur.
Steve Johnson, started as chief executive of Woolworths last week with a brief to explore radical options to re-energise the beleaguered group.
Mr Johnson acknowledged that speculation about a possible deal with Baugur could last "months" but said that he intended to improve the performance of the retail division to silence the talk.
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Source: The Financial Times