Drink and snacks group C&C has sold crisp company Tayto to the Irish food firm Largo Foods for €62.3 million in cash.

C&C said it would use the money to pay down debt. The sale was likely to be completed before the end of the year.

Earlier reports suggested Jacob Fruitfield would end up acquiring Tayto, but it fell behind in the race to acquire the iconic brand. The UK merchant bank Close Brothers also lost out. In an earlier round of bidding, it is understood Tayto (Northern Ireland), an unrelated company, was eliminated.

Tayto was set up in 1954 and currently sells two of the top five Irish crisp brands, King and Tayto. In the year to the end of February, Tayto generated operating profits (before exceptionals) of €5.8 million on turnover of €47.3 million. During this period, its gross assets were valued at €46.4 million.

Largo already has the contract to manufacture Tayto crisps on behalf of C&C and this may have given it an advantage in the sale process. Three years ago, C&C closed its Tayto manufacturing plant in Coolock, Dublin and moved the contract over to Largo. This resulted in the loss of 98 production jobs.

Largo owns several crisp and snack brands of its own, including Hunky Dory and Perri. The company has plants in Ashbourne, Co Meath and Donegal. Its sales have been growing strongly over recent years and it is now one of Ireland's largest snack food manufacturers.

The company is led by managing director Raymond Coyle and it has distribution centres in various locations in the Republic.

C&C has been struggling to increase profits at Tayto over recent years, despite an attempt to give the product a new healthy image. The UK brand Walkers has made significant inroads into its market share. Walkers is distributed in Ireland by Boyne Valley Group, the honey producer.

Original estimates reckoned Tayto was worth €50 - €60 million to C&C, but the company said yesterday Tayto had a special status in the market.

Maurice Pratt, chief executive of C&C said: "The price achieved for Tayto recognises the value of its iconic brand position in the Irish market."

C&C shares closed up almost one per cent at €6.94.

Tayto itself was founded by businessman "Spud" Murphy in Dublin. It grew from that point to become the undisputed leader in the Irish market.

Reports that Tayto was for sale have been circulating for about three years.