Fox's Biscuits owner Northern Foods has agreed to sell its chilled distribution business for £51.2 million as part of a radical restructuring plan.
NFT Distribution, which employs 1,200 people and is based in Alfreton, Derbyshire, will be sold to a new group made up of its current management and backed by Phoenix Equity Partners.
The NFT deal, revealed yesterday, is part of plan to shed businesses that account for around 40 per cent of Northern's revenues as it tries to cope with disappointing sales figures.
The shake-up was announced in May after the company revealed a 27 per cent slide in pre-tax profits for the year to April 1 - down from £62.2 million to £45.1 million.
In a statement yesterday the firm said it hoped to use the money to reduce debt and plough £10 million of the cash into the pension scheme.
Northern said it hoped to raise £200 million through the restructuring plan, which could also include the sale of its Smiths Flour Mills, which has two sites in Nottinghamshire and one in Lincolnshire and Trafford Park Bakery, Manchester.
Managers insisted they were talking about selling businesses and transferring staff to other companies, rather than cutting jobs.
Pat O'Driscoll, Northern's chief executive, said: "This represents a very positive step in our disposal programme and we are delighted to have reached a successful conclusion to this sale.
"Distribution is not core to Northern Foods going forward, but this is a great business and we wish NFT and its employees well."
The sale of NFT is made up of a cash payment of £44.5 million and a loan note for £6.7 million, which is expected to be repaid with 12 months.
David Frankish, who is currently managing director at NFT, will head the new company. The deal is expected to be completed in around two weeks.
NFT was set up by Northern in 1979 and now delivers almost 2 million cases of stock to UK retailers, such as Tesco and Sainsbury's, every week.
Turnover at the chilled distribution arm for the year to April 1 was £114.4 million and the company reported operating profits of £3.9 million.