Peninsula, the Okehampton based, produces fresh milk and fresh clotted creams for major retail, catering and manufacturing customers.
The acquisition will mean that Milk Link will be able to produce in the region of 50 million litres of milk per annum. The company expects that the acquisition will be enable it to lower it transport costs as milk will now be produced and sold locally.
Barry Nicholls, Milk Link's chief executive, said: "By increasing our processing capacity in the South West, we shall be able to reduce transportation costs and in addition provide a platform for regionally-branded products."
Milk Link is owned by 2,400 British dairy farmer who produce 10 per cent of the UK's annual demand for milk. Peninsula Milk Processors processes bottles and manufactures range of fresh milk and fresh liquid and clotted creams. It produces in the region of 1.4 billion litres of milk per annum. Most of the co-operatives member are based in the south of England.
Speaking on the acquisition, a company spokesperson said: "There is available capacity to expand production at Peninsula. Milk Link believes there is scope to expand sales through exploiting opportunities such as regional milks amongst others."