KKR’s move now sees a four-way £3bn bid battle for Safeway by Morrisons, Sainsbury and Wal-Mart/Asda.
City speculation is that KKR will bid around £3bn for Safeway in a deal structured through £2bn of debt and £1bn of equity.
KKR bought US grocer Safeway Inc - parent of the British chain - in 1986 for $4.8bn. In 1990, KKR took the group public and gradually sold off its shareholding over the years to 1999.
KKR also said it was being advised by Credit Suisse First Boston who quit yesterday as long-standing broker to Safeway due to a “potential conflict of interest”.
Safeway has appointed Schroder Salomon Smith Barney as its joint broker with West LB Panmure to replace CSFB.
Safeway said it believed this action was in the best interests of its shareholders.