The parties hope to close the deal by May 1, 2018.
Arla Foods said the production and distribution of the speciality cheese produced in Sonthofen no longer corresponds with the strategic orientation of Arla’s businesses in Germany and Europe.
The site makes Alp cheese, red wine cheese and wheat beer cheese.
Arla Foods' head of Europe, executive vice president Peter Giørtz-Carlsen, said all Arla’s production sites in Germany are focused on supplying both the German market and export markets.
“However, since the site in Sonthofen no longer corresponds with our overall strategic aim, we are pleased to have found a suitable buyer to continue its production and legacy," Giørtz-Carlsen said.
With the sale, Arla Foods said it has delivered its intention of enabling production at the site to continue. There are currently 84 people employed in total at the site. The 61 employees from production and the associated dairy shops will continue to be employed by Allgäuer Hof-Milch as part of the transfer.
Arla Foods added it is also confident of finding a solution for all the 23 administrative employees at the Arla site in Sonthofen, most of whom will receive job offers either through continued employment at Allgäuer Hof-Milch or through redeployment within Arla in Germany.
It is planned that the milk for the production will, initially, continue to be supplied by Arla Foods, whose milk supply contracts with farmers from the Allgäu region in most cases are still valid until the end of 2019.
In addition, it is expected Allgäuer Hof-Milch will continue to produce cheese products for Arla until further notice, so that Arla can comply with the current contracts with its retail customers.
The second Arla site in the Allgäu region in Bad Wörishofen is not affected by the transaction. Arla is currently examining various strategic options for this site.