The UK's Serious Fraud Office has cleared former Iceland boss Malcolm Walker after an investigation into share dealings at the frozen food retailer.

The end of the investigation means Walker is free to participate in a deal with Baugur, the Icelandic company hoping to takeover the UK's Big Food Group, of which Iceland is part, reported The Guardian.

Walker has been rumoured to have spoken with Baugur regarding the possible purchase by Walker of some Iceland stores. Since leaving Iceland in 2001, Walker set up a rival frozen food retailer CoolTrader, which has around 20 outlets.

The SFO had investigated Walker after he sold £13.5m (US$24.3m) worth of Iceland shares in December 2000 when the share price was near a five-year high after the arrival of chief executive Bill Grimsey. In mid-January 2001 the company warned that its Christmas trading had been disappointing, then at the end of the month it issued a profit warning, prompting a sharp fall in the share price.

Walker said he had sold the shares because he was leaving his role as an executive in the company, The Guardian reported.