UK supermarket chain Asda is reported to have made an indicative offer to buy 70 stores from smaller rival Safeway for up to £2bn (US$3.49bn).

Asda, which is owned by US retail giant Wal-Mart, is understood to have outlined a plan at the end of November to buy Safeway's best 70 stores. Safeway is believed to be taking the offer seriously and has signed confidentiality agreements about the negotiations, reported the Guardian.

The news comes just days after Yorkshire-based supermarket group Wm Morrison was given final clearance by the UK's Office of Fair Trading to bid for Safeway on the condition it sells 53 Safeway stores.

Supermarket groups Tesco, J Sainsbury and Asda were also required to sign undertakings not to buy any part of Safeway, other than the 53 stores on offer, if it would lead to the loss of a fourth strong competitor in the UK market.

If Tesco, Sainsbury's or Asda were to try to purchase any Safeway stores other than the 53 stores covered by the OFT agreement, the move would be subject to a public inquiry, which would, of course, take time, the Guardian said. It is already nearly a year since Wm Morrison kick-started the whole process by launching a takeover bid for Safeway.

Following the undertakings with the OFT, Wm Morrison now has until 29 December to make a renewed offer for Safeway.