Glanbia plant, Ballyragget, Co Kilkenny, Ireland

Glanbia has agreed to sell off a controlling stake in its Irish diary business to the Glanbia Co-operative Society for €112m (£94.8m).

The division is made up of Glanbia Consumer Foods Ireland, which supplies branded consumer dairy products to the Irish market, as well as exporting long-life dairy products, and Glanbia Agribusiness, which supplies inputs to the Irish agriculture sector, buys and processes grain and makes branded animal feed.

The listed Irish group will shift the two business units into a separate company called Glanbia Ireland, with a 60% stake being acquired by the farmers co-op. The joint venture will also include Glanbia Ingredients Ireland, which was spun off five years ago in a tie-up with the co-op.

The move sent shares in Glanbia soaring 7.3% today to €18.61.

Jim Bergin, currently CEO of Glanbia Ingredients Ireland, will take charge of the jv if the deal wins the approval of shareholders of both groups.

Dairy Ireland, currently a wholly owned segment of Glanbia plc, reported a 2.7% fall in revenues to €616.2m (£521.4m) in 2016 and EBITA of €30.7m.

Group MD Siobhan Talbot said: “The creation of Glanbia Ireland makes strategic sense for the shareholders of both Glanbia Co-op and Glanbia plc. It brings together in a single structure the ownership, operations and objectives of Glanbia’s Irish dairy and agri-businesses.

“With €1.5bn of annual revenue and a 2.4 billion litre milk pool, it will be a large scale, efficient business with a high-quality supply chain and the strength and diversity to face the future with confidence.”

The co-op will finance the deal by selling a chunk of shares it own in Glanbia plc.

Glanbia also reported better-than-expected annual results this morning. Revenues increased 1.3% in 2016 to €3.7bn (£3.1bn), with 2.8% growth contributed by the wholly-owned business being offset by a 3.4% decline in sales from joint ventures and associated businesses. Group EBITA jumped 12.8% to €349.8m and adjusted earnings per share rose 11.2% to €87.66 cent.

“I am pleased that Glanbia had a strong group-wide performance in 2016 delivering our seventh year of double-digit earnings growth coupled with strong cash conversion,” Talbot added. “It has been an exciting start to 2017 with a number of key strategic initiatives progressing which will shape the future direction of the group.”

Earlier this month, the Irish group spent €181m acquiring two international nutrition firms and advanced discussions to form a joint venture with Dairy Farmers of America for a new cheese and whey production plant in Michigan.