The £7 billion fight for British supermarket Morrisons will be decided at an auction on Saturday, when two US private equity groups go head-to-head in up to five rounds of bids.

Britain's Takeover Panel said today that Clayton, Dubilier & Rice (CD&R) and Fortress Investment Group had agreed to settle the matter in a one-day auction.

CD&R, a US private equity firm, started its pursuit of Britain's fourth largest grocer in June.

Softbank-backed Fortress entered the fray in July, winning the backing of the board of Morrisons for bids at 252 pence and then 270 pence a share.

CD&R returned to trump Fortress with a 285 pence offer, valuing the supermarket at £7 billion.

Given that neither bidder had declared its offer final, the Takeover Panel said all of the parties had agreed to an auction process to decide the outcome.

The bid battle is the most high-profile takeover amid a raft of bids and counter bids for British companies this year, reflecting private equity's appetite for cash-generating UK assets.