Denmark's Arla Foods Amba may make a cash offer to buy out other shareholders in Arla Foods UK, the two companies have said.
Shares in Arla Foods UK, already 51 per cent controlled by co-operative Arla Foods Amba, rose sharply in early trade and by 8.14am were up 9.9 per cent at 63-3/4p, valuing the business at around £390 million.
The two companies said in a joint statement that they were in talks that could lead to a cash offer being made for the 49 per cent stake that Arla Foods Amba does not already own.
Arla Foods UK, Britain's biggest milk supplier, was formed in October 2003 when the Danish-Swedish co-operative merged with Express Dairies.