Iceland confident of survival

Walker - who was sacked from the firm in 2001 but returned as chief executive in 2005 when he led a consortium to take Iceland private - said he was confident of raising money to buy out his former partner.

Officials responsible for winding up failed Icelandic bank Landsbanki last month launched an auction for a 67 per cent stake in Iceland, fuelling speculation growth-hungry supermarket chains would line up to buy the business or break it up.

Its founder, who along with other managers owns about 23 per cent of the business, said he had no plans to sell, as the chain reported a 15 per cent rise in full-year profit.

He said: "Why would I sell? This is my job. The last thing that will happen is that the company will be broken up."

Walker, who founded Iceland in 1970, said he was confident of raising funds to buy out Landsbanki, which took control of its stake after the collapse of Icelandic investment group Baugur

"Financing is easy as far as we are concerned," he said, adding the business was doing well and conditions in capital markets were improving. Walker has tabled a bid for Landsbanki's stake which values all of Iceland Foods at about 1 billion and has a pre-emption right to match any bid.

Some analysts say the whole business could fetch more than 1.5bn with grocers like Asda, Sainsbury's and Morrisons all hungry for more stores.

Iceland, whose current advertising campaign is fronted by reality television personality Stacey Solomon, said it made a profit before tax and one-off items of 155.5 million in the year to 25 March.

Turnover rose by 5.9 per cent to 2.4bn.