Asda’s direct sourcing arm IPL is in exclusive negotiations to buy the potato assets of veg supplier Fenmarc, The Grocer can reveal.

IPL expects the acquisition to be concluded by mid-January. As part of the deal, it will buy Fenmarc’s sites at Westry in Cambridgeshire and Southery in Norfolk as well as all plant, equipment and related consumer, supplier and staff contracts.

Separately, IPL is in negotiations to buy the potato packing business of QV Foods in early 2016.

IPL declined to elaborate on the terms of the deals but said the staggered completion dates for the two acquisitions would “ensure a smooth transition.” Both companies have an existing supplier relationship with Asda.

The sale of Fenmarc’s potato division follows the sale of its root veg business to Produce World in October.

Fenmarc’s prepared vegetable business, which is the UK’s largest supplier of freshly prepared veg, will continue to operate independently and also supply IPL.

IPL MD Nick Scrase said the Fenmarc and QV deals “formed part of IPL’s mission to simplify supply chains and develop closer relationships with growers,” with QV’s location in Scotland and Fenmarc’s sites in East Anglia giving IPL a broad geographic reach for the whole UK market.

“IPL has grown ­massively since it was bought by Asda five years ago,” said Scrase, adding it now had assets ranging from wine bottling and grocery to slicing and packing cooked meat.

Buying the potato assets of QV and Fenmarc “was an obvious extension” and would take money out of the supply chain, which could then be passed on to shoppers. “This is all part of Asda’s strategy of saving money every day,” Scrase said.

“Fenmarc has been an Asda supplier for many years, and this deal will be good news for growers while also improving job security for staff.”

Richard Anderson, MD of Fenmarc, said the supplier was “really pleased that IPL have chosen to work with our colleagues and supply chain.” The sale would “secure the long-term future of the sites for our colleagues and supply partners,” Anderson added.

QV Foods sales and marketing director Simon Martin said it had reached an “agreement in principle with Asda/IPL to sell them our Scottish packing capability,” adding the deal would “include, for all QV Scotland staff who wish to do so, an opportunity to transfer.”

Scrase said IPL wanted to “put stability back into the potato industry and give reassurances to growers with longer term-contracts that allow them to grow their businesses.” Having direct relationships with growers would achieve this and meant Asda could “ensure consistent quality for shoppers at great Asda prices,” he added.

IPL grew revenues by 21.7% to £137.4m in the year to 21 December 2013 and employs more than 1,500 staff.