Talley's Group is to buy up to 14.99% of Open Country Dairy from Olam International of Singapore for up to $46.5 million.
The deal will lift Talley's holding to as much as 70.5% from 55.5%.
The sale price is close to the current carrying value of the investment in Olam's accounts, it said.
AAP reports Olam's stake will reduce to as low as 10%, leaving it just ahead of Dairy Investment Fund on 9.99%.
Talley's Group is required to make a partial takeover offer under the terms of the Takeovers Code and its transaction with Olam will be a combination of a direct sale of shares and acceptance of the offer, Olam said.
Talley's, which is controlled by the Talley family of Nelson, has widened its interests in the food industry in recent years, including taking control of AFFCO in 2010. Its products range from frozen fish to ice cream.