Kerry Group has said negotiations with Kerry Co-Op over a potential transaction involving its dairy-related businesses in Ireland the UK have been suspended.

The development follows the stalling of talks on a possible dairy joint venture involving the two organisations, as part of a strategic review being conducted by Kerry Group.

The deal would have seen Kerry Co-Op take a 60% stake in the Kerry Group dairy-related businesses in Ireland the UK, with Kerry Group retaining the remaining 40%.

It also included an opportunity for the Co-Op to buy out Kerry Group's stake within five years.

However, there were divided views in the Co-Op about whether to proceed with the transaction, as it would have required it to raise hundreds of millions of euro from shareholders or other sources.

It is understood that the Co-Op's bid valued the business in the region of €600m.

The Co-Op owns around 12% of Kerry Group which is currently worth over €19bn.

In a statement, the Co-Op's board said it noted the Kerry Group decision to suspend discussions.

"With the prime focus of protecting the interests of, and delivering for all its stakeholders, the Co-Op, over the past 18 months, engaged in a thoroughly professional approach to give this potential opportunity every possibility of success," it said.

"We believe a fair valuation was put on the proposed transaction."

The Co-Op's board added that it will remain open to evaluating opportunities.

Kerry Group will now also have to evaluate alternative potential options for the future of the business, including seeking other potential buyers or examining its possible spin-out or restructuring.

In a short statement to the stock exchange, the company said that while the strategic review of the dairy business continues, "there is no certainty that this will lead to a transaction."

It said a further update on the process will be communicated later this year.

The Kerry Group UK and Ireland dairy business has a turnover of around €900m and includes not only processing operations, but a range of products and brands.