As Iceland founder and chief executive Malcolm Walker returns from one feat - conquering Everest - he now faces another: the potential sale of failed bank Landsbanki’s 67% stake in the frozen food retailer.

On Walker’s first day back in the office on Monday he faced a barrage of speculation about Morrisons preparing a £1.5bn bid for Iceland. Asda is also thought to be interested, while other grocers are likely to want some stores if Iceland was broken up.

On the surface, a deal for Morrisons would make sense. The grocer has ambitious expansion plans and the 750 Iceland stores would make it a much bigger force in the convenience store battle, and a larger foothold in the South where it is currently under-represented.

Asda too could benefit from a tranche of smaller stores. While it has its hands full at the moment with the Netto conversions, it could well be sizing up the opportunity for more high street locations.

Yet both Morrisons and Asda have little experience in smaller stores. And while both are investing in new formats, taking over a swathe of high street shops will throw up some serious operational challenges.

As Shore Capital points out, smaller leasehold high street stores are more costly than their superstore cousins in terms of staffing, rent, wastage and supply chain. And the cost of the conversions would also be high if Iceland’s freezers are to be stripped out.

Perhaps more importantly, Walker has the right to match any offer for the business and does not want to see it sold off so if Morrisons or anyone else is desperate to buy Landsbanki’s stake, the chances are they’d have to bid high.

And if one of the potential bidders wanted to retain the Iceland fascia, the sticking point is that the business has only ever flourished under Walker. When he returned to the business in 2005 backed by Baugur, the retailer was on its knees.

He and his team rescued it from the brink and they won’t give it up easily.

Jennifer Creevy is news editor of Retail Week

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