THE Morrisons supermarket chain last night remained silent over suggestions it was on the verge of improving its offer for rival Safeway.

The Bradford-based company was rumoured to be looking at a £750,000 cash sweetener to accompany its all-share offer already on the table.

But financial experts suggested reports of a renewed bid were pre-emptive.

Whispers of a better offer were prompted late last week when Morrisons leveraged £1bn from the banks.

Buying Safeway would bring with it £1bn worth of debt run up by the struggling chain and so it looks likely Morrisons was laying the groundwork for clearing the negative bank balance.

Despite a suggested six-way tussle for Safeway, Morrisons is still the only party with a concrete bid laid down.

Tesco, Asda and Safeway have all yet to formally join in and Philip Green looks likely to be embroiled with the Office of Fair Trading because of reports he would sell off some stores.

American Kohlberg Kravis Roberts are believed to be still studying Safeway's books.

A source close to Morrisons yesterday said it was "unlikely the group would strengthen the all shares offer with cash".

Anthony Platts, retail specialist at the Teesside office of Wise Speke, said: "Until a formal offer from a rival company is put in, Morrisons will try to keep the heat away from any cash sweeteners.

"It will only be made once somebody puts another, higher offer in. There is no point them putting money in place to add to their current bid at present because it would weaken their hand."

Morrisons' all share offer is still greatly diluted from that which was originally on the table.

Sir Ken Morrison, executive chairman, announced the original deal last month which equated to £2.9bn.

Morrisons share price quickly plummeted, bringing the offer value down to £2.5bn.

Safeway bosses approved the original offer in principle prior to a barrage of interest from all sides.

This approval has since been removed to give others more of a chance to improve upon Morrisons offer.

Sir Ken has offered incentives to two Safeway directors, Lawrence Christensen and Jack Sinclair, inviting them to join the board of the enlarged company should the deal go through.