Malcolm Walker, founder and chief of Iceland Foods, has offered to buy out two fellow shareholders - now collapsed Icelandic banks - in a bid that would value the frozen foods chain at £1bn.

Landsbanki, which is the biggest shareholder, and Glitnir, have rejected the offer, but Walker has made it known that his offer stands.

Walker, who restored Iceland Foods' profits and successful performance after a comeback in 2005, also quelled speculation over the weekend that a rival party had bid up to £1.4bn for the chain.

According to the Guardian, the company management has the power to veto any sale. Currently, the management and Walker together own about 24 per cent of Iceland Foods.

The Icelandic banks took control of 76 per cent of the business last year after the collapse of Baugur, the major shareholder and investment group which collapsed during the credit crunch.

The banks themselves are defunct now, and the Telegraph reports that Landsbanki could pay off a significant share of its debts by selling its stake in Iceland Foods.