Rescue recipe for yogurt group

ITALIAN food group Parmalat's battle for survival could put its UK yogurt chilled desserts operations on the auction block.

It has 5% of the UK yogurt market. Parmalat's board held a crisis meeting in Milan last night. Founder and chairman Calisto Tanzi quit and handed over to a rescue expert.

The group employs 36,000 people in 30 countries, but a takeover spree bloated its debt to £4bn. It has cash on its balance sheet but some is tied up in a mysterious hedge fund investment.

The shares have halved and some of its bonds are trading at 53p in the pound. The UK operation reported sales of £35m last year and pre-tax losses of £5.4m.

Directors were confident that 2003 would see some recovery. It decided last February to close its Mildenhall dairy in Suffolk, moving production to its Kendal site.

The group is keen to hold on to its dairy operations and sell other businesses first. But the UK assets could be valuable. Nestle and Danone paid top prices for UK yogurt operations from Northern Foods and Uniq.