RETAIL boss Malcolm Walker is hot favourite to buy back the frozen food chain he founded more than 40 years ago.

The Grange Moor-born businessman and other senior managers have signed a deal giving them exclusive takeover talks with Iceland, ahead of any other possible bidders.

The agreement has been reached with creditors of collapsed Icelandic bank Landsbanki, which took control of the chain in 2008.

Mr Walker and his colleagues already own 23% of the business. It is thought the team could offer about £1.5bn for the retailer, which has 22,000 staff and attracts 5m customers every week.

Iceland Foods Group has almost 800 stores UK-wide, including branches at Aspley and Trinity Street in Huddersfield and another in Batley.

Mr Walker has seen off competition from private equity firms BC Partners and Bain Capital to win the right to exclusive talks.

Bradford-based supermarket chain Morrisons was also understood to be interested in bidding for the business.

In a statement, he said: “I am delighted that the Icelandic banks have recognised the importance of management to the continuing success of the business and have been supportive in giving us the exclusive right to pursue negotiations with them.

“I have every hope that we will be able to bring these to a successful conclusion within the coming weeks.”

He added: “This gives us a fantastic opportunity to achieve a deal that will be in the best long-term interests of Iceland Foods, our 22,000 staff and the 5m customers who shop with us each week.”

If Mr Walker regains ownership of the company he founded in 1970, it would be a remarkable comeback for one of the business world’s most colourful characters.

He founded Iceland after losing his job as an executive at Woolworths.

He was ousted as chairman in 2001, after the company released a profits warning just days after he sold £13.5m-worth of shares. He was later cleared of any wrongdoing by the Serious Fraud Office.

Mr Walker was reinstated to the board in 2005 when a private consortium headed by Icelandic retail group Baugur acquired Iceland’s then parent company The Big Food Group for £326m.

Baugur collapsed during the Icelandic financial crisis and the controlling stake passed to the administrators of Landsbanki and Glitnir.