Highland Spring has agreed to buy the bottled water division of Dublin-based Greencore Group for GBP17.5m (US$29.1m).

The deal, which will include the company's Campsie Springs and Blaen Twyni facilities, will establish the Scottish company as the largest bottled water supplier in the UK, Highland Spring said today (19 November).

Under the terms of the agreement, Greencore will receive up to GBP17.5m, of which GBP10m is payable upon completion of the deal, GBP3m deferred until the second anniversary of completion and up to GBP4.5m contingent upon the future performance of the business.

Completion of the disposal, which will be effected by means of an asset sale and the sale of shares in a subsidiary company, is expected to occur on or before 30 April 2010. 

Greencore said it would use proceeds from the disposal to reduce group borrowings.

The move will see the transfer of Greencore's entire workforce of 124. The company produces private label bottled water for a range of multiple grocers and food service clients.

Les Montgomery, chief executive of Highland Spring, said the acquisition will complement its expansion strategy "perfectly".

"The deal will allow us to continue to service the strong customer base that Greencore has built over recent years and develop the distribution of our flagship brand, Highland Spring. We bring more than 30 years of experience to the table and firmly believe that sustained investment and our expertise will allow us to achieve our goal of becoming a GBP100m turnover business in the medium term," Montgomery said.