There are fears for around 55 jobs out of a total workforce of 110 at the Arrabawn Dairies in Galway, after confirmation that the plant has not been included in the sale of Arrabawn's liquid milk sales book.
In a statement, Arrabawn said it had decided to accept an offer from Aurivo to purchase its liquid milk sales book.
But the site in Kilconnell in Galway is not included in the sale and Arrabawn said it is looking at options for an alternative use.
The Kilconnell operation employs 140 people.
Arrabawn said that all sales employees will transfer with the business.
The deal is subject to due diligence and approval from the Competition Authority.
Subject to the sale going ahead, it is anticipated that processing at the plant will continue until summer 2023.
Arrabawn said that milk supply and upcoming liquid milk contracts will not be impacted by this decision.
Last night's vote was taken by the board of management at the company's headquarters in Nenagh in Co Tipperary.
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News of the sale of Arrabawn's liquid milk plant has been described as a massive blow to the workforce, their families and local suppliers.
Arrabawn's liquid milk plant opened in the village of Kilconnell in the 1960s and has undergone extensive modernisation in recent years.
Earlier this week a spokesperson for the company said Arrabawn was exploring best options for its operations due to the "challenging" nature of the liquid milk market.
However the plant was described as a "best-in-class" facility.
Local TD Denis Naughten said the news would come as a huge blow to the staff employed both directly and indirectly, their families, particularly at a time of such economic uncertainty, as well as a vast part of the rural economy of East Galway.
He said all options need to be explored to try to retain processing capacity and jobs in the village of Kilconnell.
A meeting is now being sought with the Minister for Agriculture Charlie McConalogue.
The Irish Farmers' Association has said the decision by Arrabawn Dairies to exit the sector is a serious indictment of the liquid milk business in Ireland.
ICMSA president Pat McCormack has described the decision of Arrabawn to close its liquid milk processing plant in Kilconnell as a major disappointment which the association views as a direct result of the growing and concentrated power of the top five retailers in Ireland.
Mr McCormack said that ICMSA has been in contact with Arrabawn stressing the importance of liquid milk producers still having an outlet for their milk under terms and conditions that - at a minimum - must be on a par with what is available in Arrabawn.
ICMSA also wants a long-term guarantee that the affected milk suppliers can remain in the liquid milk business.
Irish Co-operative Organisation Society president James O'Donnell today welcomed the announcement of the Arrabawn Co-op Board's decision in principle to accept an Aurivo Co-op offer to purchase its liquid milk sales book.
Mr O'Donnell said he believes the move will prove to be a positive one for liquid milk suppliers across the region and nationally.
"It will allow Aurivo to achieve even greater scale and reach in their consumer food business. It will also allow Arrabawn the opportunity to focus on their core manufacturing business which has been transformed in recent times, particularly with the recent investment of €30m in the Nenagh plant," he added.
