First Milk has agreed to sell its Glenfield Dairy business to Graham's The Family Dairy.
The financial details of the transaction have not been disclosed.
The Glenfield Dairy sale is intended to allow First Milk to focus on its hard cheese and liquid milk businesses.
Glenfied Dairy produces cottage cheese, quark and sour cream. The sale will not affect the employees at the Fife site and its contribution to the dairy sector in Scotland.
First Milk CEO Mike Gallacher said: "The sale of Glenfield Dairy follows a full strategic review by the Board over the summer. It will allow us to focus even more closely on our core businesses in hard cheese and liquid brokering. This is already starting to drive improvement with the business moving into a positive operating profit at mid-year, consistent with the phasing of our turnaround plan. We are confident that this focus will deliver improved milk prices and a more sustainable business model for our farmer shareholders.
"Today's announcement is also a good deal for our Glenfield employees, our customers and consumers. Glenfield fits well with Graham's other well-established dairy operations and the sale protects employment at the site and hence the broader Scottish dairy sector."
Graham's The Family Dairy managing director Robert Graham said: "This is an exciting acquisition for us as it allows us to extend our product range for customers and consumers even further, with the addition of cottage cheese and quark. In addition, this deal presents great potential to explore further new product development going forward."
First Milk has made significant progress in the recent times after Mike Gallacher took control of the company at the end of March 2015. He charted the company's turnaround strategy which included restructuring, establishment of new business units, commercially-oriented pricing scheme, recruitment of experienced executives.
The company set up a Greenburn review which was completed in summer and its recommendations would be implemented soon.
