NORTHERN Foods has sold its Minsterley dairy products business for £16.5m as part of a continuing drive to cut group debt.

Northern, which counts Dalepak frozen foods, of Leeming Bar, North Yorkshire, among its brands, said it had agreed to sell the operation to Uniq.

Minsterley, which made operating losses of £3.8m in the year to March 31, produces a range of dairy desserts, yogurts and cottage cheeses, which are mainly sold under the Asda and Marks & Spencer brands.

Under the deal, Uniq - formerly Unigate - will take over the company's Shropshire factory, which employs about 520 people.

The site has had investment of about £35m over the past four years, but has been under-used after Northern sold its branded yogurt business, which included the Ski and Munch Bunch brands - to Nestl in 2002.

Sean Christie, Northern finance director, said the sale was in line with the company's policy of taking action on under-performing assets.

"Although we have been successfully rebuilding sales in new areas, it would clearly be a long haul under our ownership to return the business to satisfactory levels of profitability," he said.

"It makes sense for us to sell to a company that is focused on these areas and can realise synergies with its other operations."

Minsterley is the latest of a number of businesses that Northern has sold during the past year.

The disposal of its Fox's Confectionery operation last year was followed by the sale of the Batchelors and Beck Smith grocery operations and Emile Tissot frozen ready-meals earlier this year.

Uniq, which has ten sites in the UK and is based in Gerrards Cross, Buckinghamshire, said the purchase would help reinforce its leadership position in the UK desserts market.

Uniq chief executive Bill Ronald said: "The proposed purchase further enhances our relationship with our two biggest UK customers, Marks & Spencer and Asda."

Northern Foods' share price fell 3p to 155p.