British food group Unigate said yesterday it had received a higher rival bid for its dairy and cheese business, a development which could be the prelude to a bidding war.

In a surprise move, Scotland's Robert Wiseman Dairies Plc said it was bidding £225 million sterling in cash for the Unigate business, topping a share deal in February with Dairy Crest Plc worth £220 million.

Analysts said the move came as a shock since supermarket milk supplier Wiseman is bidding for a business three times its size, geographically distant and one which would take it into largely new areas such as cheese production.

"It will probably force Dairy Crest to pay more for the Unigate business," said one analyst.

In February, Unigate announced the deal to sell its liquid milk and cheese arm to rival Dairy Crest in a long-awaited consolidation of an industry hampered by over-capacity.

In the share deal, Unigate shareholders would end up holding 40 per cent of an enlarged Dairy Crest, and the combination would drive through £25 million of annual savings by 2003.

Dairy Crest said it was considering its position with its advisers, but said Unigate's dairy and cheese activities remain subject to a binding agreement between itself and Unigate.

The merger had been expected to give Dairy Crest first or second position in every dairy sector and double its size to a turnover of around £1.6 billion.

The deal would leave Unigate to focus on the development of its position as one of Europe's leading convenience food groups with its St Ivel and Terranova fresh foods businesses.