Synlait, which is part-owned by a2 Milk Company ATM.NZ, did not disclose the deal value, but said it would take effect from Nov. 12.
The Deep South brand is about 42 years old, and was acquired by Dairyworks in 2016.
“While Deep South is a successful part of our current portfolio, ice cream is not our core business. The brand has strong growth potential for a business more focused on ice cream,” said Dairyworks Chief Executive Officer Tim Carter.
“Dairyworks is going through a period of rapid expansion in our core categories of cheese, speciality cheese, yogurt, and convenience butters.”
Dairy companies in New Zealand have been selling down non-core assets in a bid to reduce debt, improve earnings and overall operations.
Last year, Fonterra FCG.NZ, the world’s largest dairy exporter, unveiled plans to halt overseas expansion and sold its Tip Top ice cream business to UK-based Froneri and its 50% stake in DFE Pharma to a fund managed by British private equity and investment advisory firm CVC Capital Partners.
