One of the owners of the Yoplait yoghurt empire has entered the race for Spain's Ebro Puleva's E500m dairy business, potentially pitching itself against many of Europe's biggest milk groups.

The six offers that Ebro has reportedly received for its dairy operations include a proposal from PAI Partners, the Expansion newspaper said.

French-based PAI, for which a spokesman was unavailable for comment when Agrimoney.com called, has a history of investment in the foods sector, with current investments including stakes in the UK's United Biscuits and 50% of Yoplait.

PAI's interest would pitch private equity, which has suffered a series of knockbacks this month through failed stockmarket flotations, against a list of industry suitors for Ebro's dairy business, which analysts at BPI value at E528m.

Rival bidders are believed to include France's Groupe Lactalis, Italy's Parmalat and Spain's Central Lechera Asturiana (Clas).

Madrid regrets 

Success by PAI, which originated as the Paribas Affaires Industrielles investment arm of Banque Paribas, would represent the second French success this year in acquiring a Spanish dairy business.

Lactalis earlier this month announced the purchase of Forlasa, the cheesemaker, for an undisclosed sum, a move believed to have prompted some disquiet in Madrid.

"After the acquisition, the Spanish government appeared reluctant to allow a highly labour-intensive sector to be placed into foreign hands," London broker Icap said.

However, Icap added that Clas and Pascual, another of Spain's big dairy groups, "would not be able afford" the Ebro division.

Difficult market 

The auction comes against a backdrop of a tough Spanish milk market, as consumer tighten purse strings in one of the European Union countries worst affected by the economic downturn.

"Weakness in the Spanish consumer sector is well documented [and] with private label milk selling 25% below branded milks, we would not be surprised to see a further branded milk price decline of 5-10%," Icap said.

Ebro, meanwhile, is believed to be interested in acquiring SOS Cuetera's rice arm, which BPI values at E134m.

Ebro shares closed 1.2% higher at E14.34 in Madrid.