THE number of potential bidders circling supermarket group Safeway fell to five yesterday after a US buyout specialist pulled out of the running.

New York-based Kohlberg Kravis Roberts (KKR) said it had decided not to develop its initial interest.

That leaves the remaining contenders as Tesco, Sainsbury, Asda owner Wal-Mart, Bhs billionaire Philip Green, and Morrisons, which is the only party to have made a firm approach to the company.

Morrisons sparked interest in the supermarket chain by tabling a £2.9bn offer at the start of last month, but it has since seen the value of its target soar to almost £3.3bn.

In contrast, Morrisons' all-share bid is now worth £2.3bn and has lost the recommended status it had earlier been given by the Safeway board.

But Morrisons' shareholders still voted yesterday in favour of progressing a deal.

The remaining five bids are in the hands of the Office for Fair Trading (OFT), which will decide whether to refer any to the Competition Commission.

On January 17, KKR said it was considering its position in relation to Safeway and confirmed it was being advised by investment bank Credit Suisse First Boston, which resigned as Safeway's joint broker because of a potential conflict of interest.

KKR said yesterday: "KKR has decided for the time being not to progress its potential offer for Safeway any further, but will continue to monitor the situation and keep its position under review."

Anthony Platts, of North-East stockbrokers Wise Speke, said that he was not surprised at KKR's decision given the high cost of launching any full bid with only limited possibilities of success.