Somerfield bidder adds to his firepower

John Lovering, the retail entrepreneur, appeared to increase the pressure on Somerfield yesterday when he appointed Morgan Stanley as a second financial adviser on his £510m bid approach for the supermarket group. It is understood the bank will also back the bid with its own finance, joining HBOS as the main backers.

Mr Lovering, a former head of the Homebase DIY retailer, was previously only using investment boutique Bridgewell as his sole advisers. The hiring of a bulge bracket bank like Morgan Stanley shows the seriousness of his intent despite Somerfield's rejection of his initial bid of 103p a share a fortnight ago.

The move to bring in fresh backing may also indicate that Mr Lovering and his bid partner, Bob Mackenzie, were struggling to fully fund their offer. The pair were planning to offset some of the cost by selling up to 150 of Somerfield's supermarkets to J Sainsbury. But is thought that Sainsbury's may have been reconsidering this in the light of the ongoing Competition Commission investigation into its bid for Safeway. Any move to increase its share at this sensitive time might be poorly received by the regulatory authorities and undermine its chances. Sainsbury's declined to comment.

Morgan Stanley's appointment was revealed in a statement, which said that for the purposes of market making in Somerfield shares, the bank was a connected party to Mr Lovering and Mr Mackenzie.

If the deal with Sainsbury's breaks down it is thought the two entrepreneurs have considered arranging a bridging loan before stores can be sold to other supermarket groups. The problem would be that the obvious buyers are also all bidding for Safeway and so would face the same sensitivities as Sainsbury's. This would leave a limited number of buyers such as Marks & Spencer, Waitrose and the Co-op.

Somerfield shares closed 0.75p lower at 99.75p.