The two companies, which are both wholly owned subsidiaries of the Irish Dairy Board, will merge in October to form a new business called Adams Foods, with a combined turnover of £335m.
No money will change hands and both companies' existing sites will remain fully operational. Kerrygold MD Carl Ravenhall will become MD of Adams Foods, with North Downs MD Alastair Jackson taking the role of marketing director.
"The whole drive of this isn't about cost, it's about improving our product offering," said Ravenhall. "We believe by merging the businesses we can better serve our customers' needs and drive an aggressive added-value growth agenda in the UK market.
As much as the retailers try and make the shopping experience easier for their customers, we're trying to make it easier for them."
The deal would also result in a stronger knowledge base as the resources of both companies would be pooled, added Jackson. "By combining our strengths, we will have unprecedented knowledge of the dairy market and category marketing. We will be much better equipped to provide customers with all their dairy needs."
Only "seven or eight" back office redundancies were anticipated.