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Last Updated: Monday, 19 December 2005, 11:35 GMT
Dairy Crest denies buyout rumours
Dairy Crest's St Ivel Advanced milk
Dairy Crest shares eased back following the denial
Dairy Crest has denied reports that it is in talks about a possible takeover, after its shares surged more than 20%.

The UK's largest dairy food group issued the denial after the Guardian reported it was talks with French rival Lactalis about a 800m ($1.4bn) offer.

The news pushed the shares to near record highs, driving them more than 89.5 pence higher to 572 pence.

While Dairy Crest moved to cool the rumours, its shares still remained around 10% ahead at 529 pence.

In a statement the firm said it had not "received a formal approach or an indicative offer" from Lactalis or any other company.

Margins squeezed

In recent months, Dairy Crest and UK rival Robert Wiseman have blamed supermarket pressure and oil costs for falling profits.

Pre-tax profits at Surrey-based Dairy Crest halved to 17m during the six months to the end of September, from 32m in the same period last year.

Spreads - Clover, Utterly Butterly, St Ivel Gold, Country Life, Vitalite, Willow and Golden Churn
Cheese - Cathedral City, Davidstow, Wexford and Blue Cheeses from Hartington
Milk products - St Ivel advance, Frijj, Rachel's
Fresh dairy products - Petits Filous, Frubes, Yop, Weightwatchers

The loss of milk supply deals with Tesco and Asda squeezed margins, while higher oil prices meant packaging and transport costs had risen.

As well as milk, the firm's chilled food division also produces Cathedral City cheese, Clover butter spread and Petits Filous yoghurts.

On Thursday, Lactalis unveiled plans to enter a deal with Nestle that would result in annual sales of around 1.5bn euros ($1.8bn, 1.02bn) in its first year.

Earlier traders had warned that the Nestle deal could see Lactalis - owner of the President cheese brand - rule out any further European acquisitions.

Supermarkets squeeze Dairy Crest
10 Nov 05 |  Business
Wiseman shaken by increased costs
09 Nov 05 |  Business
Dairy closures to hit 'hundreds'
16 May 05 |  West Midlands
Dairy company sold in 17m deal
05 May 05 |  Derbyshire
Milk shake-up sours Dairy Crest
10 Nov 04 |  Business
Tesco deal loss hits Dairy Crest
27 Aug 04 |  Business

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