In a brief statement to the stock exchange this morning, Arla Foods UK said:
"The board of Arla Foods UK plc and Arla Foods amba jointly announce that they are in discussions which may or may not lead to a recommended cash offer being made for the 49% of the share capital of Arla Foods UK plc not already owned by Arla Foods amba.
"Shareholders of Arla Foods UK plc should be aware that there is no certainty that an offer will be forthcoming. A further announcement will be made in due course."
Leeds-based Arla Foods UK was created following a £155m takeover of Express Dairies by Arla Foods in 2003. As well as servicing large own label milk contracts with the major multiples, it markets the Lurpak and Anchor butter brands, and produces Cravendale milk.
In its last full set of published results, the 12 months to 30 September 2005, it generated pre-tax profits of £44.5m on sales of £1.32bn.
In August it completed the sale of its middle ground and doorstep delivery businesses to Dairy Crest for £33 million.