BWG Holdings, owner of the Spar franchise, has emerged as a potential bidder for some of the supermarkets in the Iceland frozen food chain, whose loss-making Irish unit is on the brink of closure.

While the stance of the German discounters Aldi and Lidl was unclear last night, the SuperValu-Centra owner Musgrave Group was believed unlikely to bid for any of the stores.

Up to 160 people will lose their jobs when Iceland's seven stores close down over the next fortnight, although the company wants any buyer to retain its staff. The staff will remain on the payroll in the short term while efforts to find a buyer continue.

Senior retail industry sources believe the group of seven stores, most of which are in Dublin, is more likely to be broken up than sold as a single unit.

Some of those sources believe the business has been on the market for a number of months. The fact that no buyer has emerged so far suggested a lack of interest, they said.

They also said the Iceland outlets were disadvantaged because of a comparative lack of parking spaces. In addition, they pointed out that frozen food was not in vogue. Such factors were likely to depress the price that the business or parts of it might fetch, the sources said.

There are six Iceland stores in Dublin - at Thomas Street, Finglas, Raheny, Ballyfermot, Talbot Street and the Navan Road - and one in Letterkenny, Co Donegal.

According to its parent, the Icelandic investment group Baugur, the business lost €1 million in the year to April. With sales down 20 per cent in the two years to April, the losses in the most recent year reversed net profits of €1.53 million a year earlier.

There was no official comment yesterday from any of the established players in the retail trade.

However, BWG is considered likely to take a look at the Iceland sites as possible new locations for large-format Eurospar stores, the focus of its most recent expansion.

Against that, the company already has a strong presence in Dublin and in recent months it has pointed out that the market in the city is particularly crowded.