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Milk producer Express Dairies' announcement of a takeover approach from Scandinavian group Arla has confirmed speculation which has sent the shares up 70 per cent since yesterday morning to 24.75p. Elliott Davis reports.

Express Dairies has bowed to the pressure of speculation and disclosed that Arla, the biggest producer of milk in Europe and the third largest in the UK, is prepared to bid up to 35p a share for the company. Such an offer would value Express (EXD) at around £100 million and would create the UK's largest milk supplier.

When the markets closed on Friday the shares stood at a lowly 14.5p each. That was only 2p above a three-year low.

If Arla's interest leads to a bid, it could justify the faith of those who have held on to Express in recent times. The company has gradually been losing ground to rivals such as Dairy Crest (DCG) and Robert Wiseman (RWD) ? largely on account of the rapid decline of the doorstep delivery market.

Express has traditionally been strong in that area. But the company has failed to adapt as well as its peers to consumers increasingly buying milk at supermarkets.