Australian food giant Goodman Fielder has signed an unconditional agreement to sell its flour milling and mixing business to joint venture partners GrainCorp and Cargill Australia for about A$200m (US$109m).

Goodman Fielder CEO Tom Park, said the sale of the Australian flour mills is consistent with the company's strategy to focus more on its retail branded businesses and represented good value for shareholders.

"The sale agreement ends a very competitive bidding process that has yielded a significant return to Goodman Fielder shareholders and we intend to complete the transaction by early October," Park said.

"GrainCorp has extensive capability in grain procurement, storage and handling. Cargill is one of the largest flour millers in the world. Together the joint venture will provide Goodman Fielder with on-going security and quality of supply on competitive terms.

"A key element of the transaction is a long term supply contract for the supply of flour-based products to Goodman Fielder. The terms and conditions of the supply agreements are commercially confidential between the parties.

"We are looking forward to working with GrainCorp and Cargill as long term strategic partners that can support our retail branded strategy and provide new opportunities for milling employees."

Park said active capital management would continue to play an integral role within the shareholder value model being pursued by Goodman Fielder: "Divestment of non-core businesses, and continuing control over funds employed and capital expenditure will continue to underpin strong free cash flow and sustainable growth in core business EBIT."

"We have already invested the proceeds of previous asset sales in the business and improved shareholder returns through a A$200m on-market share buy-back. The first A$100m tranche of the buy back has been completed, and the second A$100m tranche is well under way. The current buyback will, in tandem with improved operating performance, increase earnings per share."