Dairy Crest surged 23.6 to 372.6p after Germany's Theo Mueller Group, which makes M�ller yoghurts, said it had acquired a 3pc stake in the London-listed company. The move triggered speculation the secretive German dairy giant may be lining up a bid for Dairy Crest.

Damian McNeela, an analyst at Panmure Gordon, told Bloomberg: "This indicates that Mueller may make a formal offer for Dairy Crest � they might be looking to widen their product base in the UK".

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Dairy Crest said Monday it expected first-half profit and revenue to be ahead of last year driven by strong performance from its Cathedral City cheese and Clover spread brands.

Cathedral City's revenue was expected to deliver good growth against strong volumes a year ago, while Clover as expected to deliver both volume and revenue growth, continuing the positive performance from last year, the company said.

First-half performance would be held back by a reduction in volume and revenue for brand Frylight as unusually hot weather crimped oil usage, though the company said trading had significantly improved in recent weeks.

Dairy Crest also said it continued to restrict Country Life promotional activity as ongoing high butter costs weighed on sales.

Dairy Crest touted several new product releases within the next for months for Cathedral City.

The company maintained its outlook for the full year.

'Our Cathedral City and Clover brands continue to drive the business forward, supported by an exciting pipeline of new product developments,' said Mark Allen, Chief Executive.

' For Cathedral City to be named one of the UK's top ten brands by consumers, alongside John Lewis, Amazon and Ikea, is testament to the power of the UK's favourite cheese brand, and we see good growth potential in the UK and beyond.'

'Our balance sheet is in good shape and we are moving forward with the first phase of the expansion at Davidstow. Our expectations for the full year remain unchanged.'