Chairman John von Spreckelsen’s letter said that although Somerfield was financially strong, trading conditions, particularly price competition, remained tough.
The board has recommended that shareholders accept the 197p per share offer at the egm on November 28.
However, RW Baird analyst Paul Smiddy said: “The explanation for why the company should be taken private is very thin. This is not a compelling price.”
Speculation is mounting in the property market on the future of the estate, particularly Kwik Save, said Allen Shepherd, associate director of corporate retail at surveyor Christie & Co.
“There are some fantastic rumours,” said Shepherd, who is helping Somerfield dispose of some of its Scottish stores. “I’m sure they will look at the whole portfolio, including Kwik Save. This is not a property deal, but there will be rationalisation.”
Meanwhile, Somerfield has increased its bogof offering by 40%. It has also permanently cut prices on all its meat, fish and poultry as part of its Price Smash initiative.