Irish nutritional solutions and cheese firm Glanbia has entered into an agreement with its largest shareholder Glanbia Co-operative Society Limited (GCSL) to form a joint venture Glanbia Ingredients Ireland (GII).

The joint venture transaction, which is subject to relevant shareholder approval, is a result of signing of memorandum of understanding (MoU) by the two companies on 29 August 2012.

The transaction also includes Glanbia’s dairy ingredient division – Dairy Ingredients Ireland (DII) – business and assets such as 45% share of the Corman Miloko Ireland JV and 23% shares of the Irish Dairy Board.

DII is a largest dairy ingredients processor in Ireland, collecting 1.6 billion litres of milk and processing it into c.180,000t of dairy ingredients, primarily for export to about 50 countries worldwide.

Under the proposed transaction, Glanbia will hold 40% in GII, while GCSL will hold 60%.

Glanbia group managing director John Moloney said the proposed new joint venture is based on an existing, well invested and profitable international dairy ingredients business.

"This creates a strong platform from which to grow milk volumes and to capture the benefits arising from increased milk production and processing, post the abolition of milk quotas," Moloney added.

"The Joint Venture will ensure a continuation of strong and complementary links between the plc and the Society within a structure that better accommodates the strategic interests of Society members. It also enables Glanbia to continue its successful international growth strategy and to maximise value for all shareholders."