Danish dairy group Arla Foods has entered into talks with its UK subsidiary, Arla Foods UK, which may lead to a recommended cash offer to purchase the remaining 49% of shares that Arla does not already hold.

"We are unable to give more background or further information at this time because of restrictions imposed on us by the City Code on Takeovers and Mergers. All I can say is that our approach is a natural development from the merger in 2003 between Arla Foods plc and Express Dairies. We are now in talks with our British subsidiary about a possible bid for the remainder of the shares. We will make further announcements in due course", Arla Foods CEO Peder Tuborgh said.

Shares in Arla Foods UK increased by 10.33% in early morning trade following the announcement, from 58 pence (US$1.09) at close of trading last night to 63.99 at 10am (GMT).