The government has cleared the way for Robert Wiseman Dairies' to bid for Unigate's milk and cheese business.

Trade and Industry Secretary, Stephen Byers, has decided not to refer the East Kilbride-based company's £225m offer to the Competition Commission.

A formal offer from Robert Wiseman is now thought to be imminent.

Unigate had agreed to sell its operations to dairy product firm Dairy Crest for £220m.

In a statement last month, Unigate said: "Whilst continuing to fulfil its obligations under the merger agreement with Dairy Crest, the board is now also in discussions with Robert Wiseman regarding its offer."

Merger details

Unigate's dairy division has 4,400 employees, and delivers milk to more than 1.3 million homes in the UK. Its turnover last year was £529m.

Dairy Crest, the UK's largest supplier of stilton cheese, would own 60% of the enlarged group, with Unigate holding 40%.

The deal would have brought together Dairy Crest's Clover spread, Cathedral City cheddar and Frijj products and Unigate Dairies and St. Ivel Provisions (cheese, butter and powder).

Robert Wiseman expects any purchase to be made in cash and funded through new bank facilities.

Robert Wiseman's strength in Scotland and northern England together with the strength of Unigate's dairy operation in southern England would create a "truly national player with a superb geographic fit", one industry source said.

Scottish supply

Robert Wiseman has been referred to the UK Competition Commission over the supply of fresh processed milk in Scotland.

The liquid milk and unbranded dairy product market has hit tough times, with price pressures making trading conditions difficult.

Unigate last year said its dairy division had taken a knock, reporting a fall in profits at the dairy arm for the half-year.

Dairy Crest was spun off from the UK's milk marketing board and floated in 1996. It aims to become the leader in the UK market for general dairy products, which it hopes will offset the trend of declining liquid milk prices.

The company currently has about 11% of the UK milk market and is the fourth largest milk producer in an increasingly competitive industry.