Dairy group Arla Foods has played down reports that the company is planning to buy German dairy firm Viöl - but admitted the two sides had held talks over a possible alliance.

Reports in Germany and Denmark had claimed that Arla, the Danish-Swedish dairy giant, had contacted Viöl over a possible takeover and potential investment in a new dairy near the town of Husum.

However, a spokesman for Arla said the reports were "incorrect", although he said there had been contact between the two businesses.

"There have been talks but it was more about co-operation," the spokesman told just-food. "It was very unspecific at this stage."

Late last year, Arla, which has a limited presence in Germany, named the country as one of a clutch of markets in which it planned to invest.

The spokesman reiterated Arla's interest in Germany and said the group would look closely at expanding in the country this year.

"Germany is a very important market to us," he said, although he added whether any interest would "result in announcements is something I cannot say".