Irish dairy giant Glanbia has announced that it has formed a new joint venture company with UK dairy Milk Link to serve the UK cheese market.

The new joint venture will be called Cheese Company Holdings (CCH), and will be 75% owned by Milk Link and 25% by Glanbia.

Glanbia and farmer-owned Milk Link said CCH would address the strategic objectives of both companies. Glanbia Cheese, the group's pizza cheese joint venture with Leprino Foods will be unaffected by the transaction, Glanbia said.

CCH will be established with a capital subscription of £16.9m (US$31.7m) by Milk Link for its 75% controlling stake and an initial £5.6m by Glanbia for its 25% interest. Simultaneously, Glanbia will sell 100% of its Glanbia Foods unit to CCH for £94.3m.

The two companies said CCH will be the second-largest cheese producer in the UK, with strong positions in cheddar, Stilton and British territorial cheeses, supplying the retail, foodservice and ingredient sectors. It will operate four cheese processing facilities and a consumer packing facility in Great Britain, and employ approximately 1,000 people.

"This transaction will facilitate our strategic focus on high growth areas such as consumer products, dairy ingredients and in particular the nutrition market. At the same time, it allows us to maintain both access to the UK market for our Irish cheese production and a continuous supply of products to serve our growing nutritional, ingredients and mozzarella businesses," said Glanbia's managing director, John Moloney.

The companies said the transaction is conditional on approval by the Irish competition authorities and the Milk Link Member Council. It is expected that these conditions will be fulfilled, and the transaction completed, by the end of March 2004.