C-store operator Alldays has confirmed that it is in talks with a third party to sell the group’s 600-strong estate.

Weekend press speculation has the Co-op as a front runner for the chain which has a market value of some £2.5m but with debts of £190m.

In a statement Alldays said the deal could lead to “debt restructuring” and a payment to shareholders of 5p. The neighbourhood retailing chain’s shares closed 5.5p on Friday.

Sainsbury and Tesco are other potential buyers as both chains have been developing smaller and local store formats and taking over Alldays would give access to a number of town centre stores.