Global nutrition group Glanbia has signed a non-binding memorandum of understanding (MOU) with Glanbia Co-operative Society (Society) to sell its 60% stake in Dairy Ireland to the the latter.

According to the deal, Dairy Ireland businesses will be combined with the Glanbia Ingredients Ireland and this new entity will be renamed as ‘Glanbia Ireland’, where Glanbia will own a 40% stake and the remaining 60% stake will be owned by Society.

The total enterprise value agreed for Dairy Ireland is approximately €340m.

The deal will see the Society acquire a 60% interest in the Dairy Ireland segment net of pension obligations and excluding working capital for €112m.

Upon completion of the deal, working capital will be paid directly to Glanbia by Glanbia Ireland.

"The total enterprise value agreed for Dairy Ireland is approximately €340m."

The transaction, which is subject to the negotiation of final transaction related agreements and an approval vote of the shareholders of both Glanbia and the Society, is expected to be completed later this year.

With the creation of Glanbia Ireland business, its shareholders intend to create an organisation that will work towards development of the company through existing Irish dairy supply base as well as create a ownership structure that is aligned to the needs of that supply base.

Glanbia Ireland will be build through a major investment programme with plans for further strategic investment of approximately between €250m and €300m from this year to 2020, which will focus on enhancing processing capacity and drive value.

The investment will be mainly financed through debt facilities within Glanbia Ireland.