Nestlé said that after nine years of losses in the notoriously competitive UK ice cream market it was in discussions to sell its Zoom lollies and Mega Truffle ice cream business, reports the Financial Times.
Talks have begun with Richmond Foods which owns the Treats brand, and has a 60 per cent share of the supermarket private label ice cream market.
According to Nestlé , Richmond could better develop the Nestlé ice cream brand.
As well as buying the assets, Richmond will pay a percentage of future turnover to Nestlé in return for using the brand.
Richmond shares jumped 18 per cent or 30p to 200p on news of the talks, which are expected to take some weeks.
Graham Millar, group finance director of Nestlé UK, said its UK ice cream business did not have "critical mass."
He said "our prime concern is about the ongoing development of the business.
We have put in a huge effort and invested a lot of money.
We have lost a good bit of money each year and we couldn't see it making a profit in the foreseeable future."
Nestlé is the world's second largest ice cream maker.
It entered the UK market in 1992 with the purchase of Clarke Foods from the receiver for a reputed £30m. The UK ice cream market is dominated by Unilever's Birds Eye Walls division.
Last year, after a Competition Commission report on the impulse market, retailers with a freezer cabinet supplied by Walls were allowed to fill up to half of it with rival products.
Mr Millar said that after that change Nestlé had increased its share of the impulse market to 16 per cent, but was still far behind Walls, with 63 per cent.
Richmond has 4.2 per cent of the market, which has been declining.
According to analysts, the Nestlé business could increase Richmond's annual turnover by a quarter to a third, and the extra volume should improve its margins.