Synlait Milk said on Monday it would offload its Waikato district manufacturing facility and two Auckland sites for $US178 million ($271 million) to healthcare multinational Abbott.
The sale was a much-needed step change for Synlait which was burdened by heavy debt, the company's chief executive Richard Wyeth said.
"This sale will deliver a stronger, simpler and more secure Synlait," he said.
"It enables us to, in time, explore opportunities to diversify what we do and better enable Synlait to reach its full potential."
The company said it would focus on its core operations on New Zealand's South Island, where it has its manufacturing facility in Dunsandel that produces milk and infant formula.
Mr Wyeth said that facility south of Christchurch had experienced a number of complex manufacturing challenges that had hampered Synlait's ability to continually deliver product on time and at scale.
While Mr Wyeth did not elaborate on those challenges, he said they have now been resolved.
Synlait also said on Monday it had posted a net profit after tax of $800,000 for the 12 months to July 31.
Proceeds from the asset sale would be used to pay down net debt, which stood at $250.7 million as of July 31 and down from $551.6 million a year ago.
At 1.30pm on Monday, Synlait shares were trading 10.4 per cent higher at 69 cents.
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