Australian dairy Bonlac Foods has said it has exercised an option to sell its 11.4% stake in Australasian Food Holdings for around A$138m (US$81.2m).

The funds from the sale are to be used to reduce debt.

Australasian Food Holdings was formed in 2002 with the merger of the Australian and New Zealand food operations of Bonlac and New Zealand dairy giant Fonterra.

Bonlac Foods is currently in talks regarding a merger with Murray Goulburn, the Australian farmer-owned dairy cooperative.