Upper-class dairy manufacturer King Island Co. saw its share price soar to A$2.79 (US$1.39) over the last two days as the market responded to the company’s revelation that it was in takeover talks with an “outside party”.

King Island said yesterday [Wednesday] that the talks “may lead to a proposal being put to King Island shareholders”.

Market watchers have speculated that the most likely buyer is National Foods (NatFoods). The share jump has meant that King Island now has a market value of A$64.3m and the dairy giant, which is 18% owned by New Zealand giant Fonterra, is seeking acquisitions worth up to A$100m.

NatFoods has refused to comment so far on its interest in the company.