The Musgrave Group has abandoned a joint bid to acquire the forecourts network of Statoil in the Irish Republic, increasing the likelihood that Tesco could become a frontrunner for the 69 sites.
The Cork-based wholesaler, which operates the SuperValu and Centra franchises, had teamed up with Irish conglomerate DCC for the joint bid for Statoil, which is pulling out of the Irish market.
The offer was seen as a strategic move to prevent Tesco, which has also expressed an interest in the company-owned Statoil stations, gaining a substantial presence in the convenience sector.
Musgrave has given no explanation for its withdrawal from the race.
However, it is believed that a key factor could be its escalating price, which is rumoured to have jumped from an initial estimate of E150m to E200m as a result of the bidding war.
Five groups, including Tesco, are still in contention for the stations and a sale is expected by the end of next month.
Unlike Musgrave, which would have supplied food for the forecourt shops while DCC managed the petrol side of the business, Tesco would be able to combine both functions.
In addition to accounting for more than 25% of the Irish grocery sector, Tesco now also has 5% of the petrol market, with eight stations operating alongside its stores.