Donegal Creameries agrees sale of its Milk and Retail stores businesses

Donegal Creameries has struck a deal to dispose of its Milk Business and Retail Stores Business to Connacht Gold Co-operative Society Limited.

The deal is worth 13.5 million euro to the company but could rise to almost 19 million depending on how the business performs.

The deal will see Connacht Gold take over the drinking milk business- Its products are primarily sold directly to consumers or retailers as well as restaurants and food service companies.

Donegal milk products include butter, cheese and milk powder with its raw material milk sourced from farmer suppliers based in Donegal and Northern Ireland.

Donegal’s Retail Stores Business includes eleven stores -  nine of which are in the Republic of Ireland and two in Northern Ireland.

Connacht will pay Donegal Creameries €13.5m and further sum of up to €7.4m dependent on the operating and financial performance of the Milk Business during the year to 31 December 2012.

The proceeds from the Proposed Transaction will be used by Donegal for general corporate purposes.

Ian Ireland, Managing Director of Donegal Creameries plc, said the company will continue to develop in its key strategic areas of Seed Potato and Niche Value Added Dairy Products.

It will also maintain its Animal Feeds business, significant Property and Investment Portfolio, including The Grianan Estate and its investments in associates.”