Food group Glanbia has said it has has signed contracts with Glanbia Co-Op to enter into a joint venture deal for its Dairy Ingredients Ireland unit.

Glanbia will own 40% of the venture, while the Co-Op will own 60%.

This agreement comes after the signing of a memorandum of understanding between the two parties in August and Glanbia said it represents a further step towards completion of the deal.

The transaction is dependent on approval by Co-Op shareholders and a vote will be held on the deal on November 13. Glanbia will then hold an EGM in late November where its shareholders will get an opportunity to vote on it.

A statement from Glanbia said that the deal is expected to be completed by the end of the year, if approval from the two sets of shareholders have been received.

Glanbia's group managing director John Moloney said that the company is facing clear strategic choices as it approaches a post-quota era.

''The proposed new joint venture is based on an existing, well invested and profitable international dairy ingredients business. This creates a strong platform from which to grow milk volumes and to capture the benefits arising from increased milk production and processing, post the abolition of milk quota,'' he added.

He said the joint venture will ensure a continuation of strong and complementary links between the plc and the society within a structure that better accommodates the strategic interests of society members.