French food giant Danone has denied that it is mulling a possible takeover bid for NZ Dairy Foods, an offshoot of dairy behemoth Fonterra.

Danone CEO Franck Riboud told French financial newspaper Les Echos: "We are not participating in current discussions."

Peter McLure, CEO of Auckland-based Dairy Foods has said that there are five potential bidders for his business, which must be sold by Fonterra to satisfy competition regulators. Dairy Foods controls about 40% of New Zealand's domestic dairy produce sales.

Three of the bidders have been named as National Foods, the Great Milk Company, a New Zealand farmers co-operative, and Dutch company Friesland Coberco Dairy Foods.