Sodiaal's takeover bid for French dairy peer Entremont Alliance has stalled over the failure to reach agreement with the emmental maker’s banks over the servicing of the company's debts, a source close to the negotiations has told just-food.

Exclusive talks between the two parties, on what was initially a proposed merger, began last October.

Entremont's sole shareholder is holding company Unifem, whose controlling investor is Belgian financier Albert Frère.

“The major obstacle continues to be the provision made for Entremont’s debts - estimated at EUR335.6m in February 2010 - with Sodiaal looking to have part of this sum wiped off and the remainder re-scheduled," the source said.

"But these are difficult time for banks, exacerbated of late by the crisis surrounding the euro and just how accommodating they can afford to be is the central question."

Both Sodiaal and Entremont confirmed that negotiations were continuing but declined to comment further.

However, an Entremont spokesman did underline that the company’s trading position had improved significantly in recent months, buoyed by an increase in global prices for products such as powdered milk and butter.