Three months after setting up a division across the Tasman, milk company A2 Corporation is on the brink of selling the Australian subsidiary for more than A$1 million.

It has signed a conditional agreement to sell A2 Australia to F&N Dairy Investments, a wholly owned subsidiary of Singapore stock exchange-listed Fraser & Neave, for A$1.1 million.

A2 joint chief executive Richard Le Grice said the deal was clinched on Christmas Eve and that some due diligence conditions and final pricing arrangements remained.

"We decided to sell because we have had a change in direction in the company in the past six to eight months. It was felt we needed to be in the business of selling A2 milk, rather than talking about it. We're excited to have a company of Fraser & Neave's strength and ability," Le Grice said.

"This allows us to not have to continue putting more resources into Australia but to be freed up to concentrate on other parts of the world."

If completed, hopefully by the end of next month, the sale gives F&N the right to sell A2 milk products throughout Asia.

A2 Australia was set up in October after A2 terminated its contract with Brisbane business and licensee A2 Dairy Marketers, which had been fined for making misleading statements about the health benefits of the alternative milk.

The subsidiary distributes A2 milk - which has targeted a niche market with milk it claims has extra health benefits - into supermarket chains and health shops in Queensland and South Australia.

"We were basically doing a roll out [in Australia] but Fraser & Neave came along and said they'd be very interested in purchasing [A2 Australia] and using it to develop not only A2 milk in Australia but also in Asia," Le Grice said.

"Should the deal be completed, the intention is that we will work closely with them to develop A2 milk with them and further afield in Asia."

Fraser & Neave is a leading Asia Pacific consumer group with a dominant standing in the food and beverage, property, and printing and publishing industries. Listed on the Singapore Exchange, its total assets are around S$8 billion and the company has a presence in more than 20 countries spanning the Asia-Pacific region, Europe and the US.

Earlier this month, A2 reported a pre-tax loss of $1.35 million for the half-year ended September, compared with a loss of $1.34 million for the same time last year. Earnings per share were 0.6c, down from 1cps. Le Grice has been appointed joint chief executive, with Andrew Clarke.