Irish dairy firm Donegal Creameries is to sell its milk and retail businesses to Connacht Gold Co-Operative Society.

The deal, which is still subject to approval by Ireland’s competition authority, will see Connacht pay EUR13.5m (US$18.6m), and a further EUR7.4m dependent on the operating and financial performance of the milk business up to the end of 2012.

Donegal’s milk business supplies retailers and foodservice companies with branded and private-label milk.

The retail business comprises eleven outlets, nine of which are in the Republic of Ireland and two in Northern Ireland, and sell fertiliser, feeds and general farm supplies to the farming community.

Ian Ireland, managing director of Donegal Creameries, says the deal will help secure the long-term future of the dairy industry in Ireland

“Our milk business will now become part of Connacht, whose commitment to the dairy industry, together with their well invested facilities and capacity, will meet the needs of Donegal’s milk producers,” he said yesterday (31 October).

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“In turn Donegal’s milk producers will provide Connacht with access to a quality milk supply pool. Furthermore, the combination of Donegal and Connacht’s milk businesses will provide the market with a leading specialist producer in the Republic of Ireland with a well developed sales and distribution network.”

Donegal will maintain continue to develop its seed potato, niche dairy products, animal feeds and animal feeds businesses, the company added.