GLANBIA has reached an agreement to buy the Limerick-based Dawn liquid milks business from Kerry Group.
The terms of the deal, which is subject to approval by the Competition Authority, were not disclosed, but it has been speculated that the deal would be worth about €10m.
Under the sale, Glanbia will take over the Dawn and Golden Vale brands that were operated by the Limerick plant. The brands are focused mainly on west Tipperary, Clare and Limerick.
A spokesman for both companies said the sale fitted both parties' needs.
"There has been a need for restructuring and consolidation in the industry for some time and this agreement fits into that process," he said.
"Consultations on the sale with staff in Limerick and suppliers have now begun."
The transaction, which is a relatively small one for both firms, had been rumoured for some time.
Kerry acquired Dawn when it bought Golden Vale back in 2001. It sold the Dawn Galway liquid milk business to Arrabawn last March. Despite the Limerick sale, Kerry are not expected to sell their Killarney-based liquid milk business.
Bloxham Stockbrokers' Joe Gill said the sale made sense for both parties.
"This transaction helps Glanbia consolidate a sector that is struggling under a deep consumer recession while allowing Kerry to exit a business that is sub-scale and not part of their strategic growth plans," he said.
Goodbody's Liam Igoe said it should work for the two firms.
"There are too many small players in the liquid milk market as it is, so consolidation has been on the cards for a while now," said Mr Igoe.
"Kerry is much smaller than Glanbia in terms of the liquid milk business and has limited operations in Kerry and the north-west so, on the face of it, this deal would make sense."