Shares in Glanbia slumped by 7% as the foods group urged caution over reports that it was to sell its flagging Irish dairy division for more than the E250m-280m analysts have been expecting.

The group, acknowledging media speculation over the sale, said that it had yet to receive an offer for the unit, Ireland's biggest dairy processor.

"At this stage there can be no certainty that a transaction will be forthcoming," Glanbia added.

Glanbia shares at one point slumped to E3.16, reversing gains achieved on Thursday when the Irish Independent reported that the dairy division could go for E310m-350m, net of a E70m pension deficit.

Currency help

The company has been approached by its biggest shareholder, Glanbia Co-operative Society, over a deal which would return to co-operative ownership the business on which Glanbia's transatlantic empire was built.

The dairy unit last year reported its first ever loss, squeezed by a market slump which hurt the prices of its products more than that of its major raw material – milk.

However, prospects for dairy exporters have improved with the recovery in global demand, coupled with, for groups in the eurozone, a decline in the value of Europe's single currency, which has been pulled lower by fears over the weak state of Greece's public finances.

Takeover premium 

Glanbia shares have also been boosted since the talks were announced a month ago by the suggestions that the co-operative will, as part of the deal, distribute its remaining shares in the group directly between its members.

Such a move would, by reducing the co-op's grip on Glanbia, increase the chance of a bid - with an inherent takeover premium - for the whole of the group, besides increasing managers' operational freedom.

The co-op's stake is expected to be reduced from 55% to about 25% if the dairy deal goes through.

Glanbia shares stood at E3.20 in late trade in Dublin down 5.9% on the day, if up 23% since the co-op's approach was revealed last month.