Dairy Crest could be a bid target because its strategy to move into value-added dairy and build powerful brands is an interesting proposition for potential buyers, say analysts.

In a research note on the processor, Citigroup said: "We would put the probability at 25% of Dairy Crest being acquired on a three-year view. We think that the most likely candidate is French privately-owned dairy company Lactalis."

Last December there were reports in the press that Lactalis had held talks with Dairy Crest over a possible £800m takeover.

Citigroup said: "We think Lactalis would be interested in Dairy Crest's spreads and cheese brands. There would also be an opportunity to leverage Lactalis's Continental cheese and butter brands using Dairy Crest's extensive chilled distribution network in the UK.

"There probably would be some anti-trust considerations in cheese as a combination would control about 55% of the UK branded Cheddar market."