Major China milk supplier Modern Farming has denied rumours it is the subject of a takeover bid by leading dairy products manufacturer Mengniu Dairy.

Modern Farming is based in the eastern Anhui province. Its major shareholders include global investment company KKR.

"We are not in discussion with any company in terms of acquisition," said a Modern spokesperson. A Mengniu spokesman declined to comment on the claims.

Mengniu's 2011 annual report stressed the company is planning to invest heavily to improve milk sources through developing "large-scale ranches and … modernised ranch facilities for its suppliers".

However, an industry specialist said the rumours of talks, reported in the Chinese press, looked shaky.

Wang Dingmian, head of Guangzhou Dairy Industry Association, said both companies are listed in Hong Kong and added: "Buying a listed company requires a lot of work, which is not something that Mengniu's new CEO is likely to look into now."

Mengniu appointed a new CEO, Sun Yiping, in April to largely improve its reputation for producing reliably healthy food.

Wang added Modern has its own ambitions, having started to manufacture bottled milk in April. "Modern knows it would be a strong rival of Mengniu, so what's the point to sell itself to Mengniu?" he asked.