It is understood that the deal would enable Dairy Crest to carry on its milk processing activities, following the termination last week of a £60 million contract to supply number one UK retailer Tesco with a reported 160 million litres of fresh liquid milk. Dairy Crest will transfer the co-operative's milk processing activities to its existing sites in Cambridgeshire and Gloucestershire. Currently MDC processes around 200 million litres of milk a year (compared with Dairy Crest's 1.5 billion litres) and the acquisition would further consolidate Dairy Crest's position in the doorstep delivery sector (which accounts for around 15 per cent of the company's turnover).