The business, which has been up for sale since February this year, is worth an estimated £1bn. It has attracted a number of private equity firms and companies including Lion Capital.
Goldman Sachs is overseeing the sale, which should be completed by the end of the year.
Although the frozen foods division has annual sales of around £1.4bn, it has been underperforming in recent years as European consumers opt for fresher alternatives.
The Anglo-Dutch firm will sell the business to concentrate on staple brands such as Hellman's mayonnaise, as spiralling production costs and falling sales continue to shrink profit margins.
The sell-off represents renewed merger and acquisition activity within global food manufacture, with chilled and frozen foods divisions providing the best options for companies looking to consolidate their reach.
FoodVest, the acquisitive arm of venture capital outfit CapVest, is a leading player in this acquisition activity, having recently bought frozen foods firm Findus from EQT.
The firm has also expressed an interest in Heinz' European frozen foods business as it moves to consolidate its assets.
"There's still a lot happening in the sector. It's a very unconsolidated market relative to the retail sector it supplies. Manufacturers are constantly getting beaten up by retailers," PricewaterhouseCooper's food sector leader Neil Sutton said.
Unilever is implementing a five-year plan that will see its portfolio brands cut from 1,600 to 400. The plan was supposed to free up resources, allowing for an increased marketing budget and the offsetting of rising production costs, but analysts believe the company has been too slow to shake off unprofitable labels.
"Deciding to put the majority of our European frozen food business up for sale has been a tough call. It has been a successful business for us over many years, we've built some great brands for consumers with memorable advertising," said Patrick Cescau, Unilever's chief executive.
"However, although we have made great progress in increasing profitability, in recent years growth has been harder to come by. After an exhaustive review we have decided that the best way for us to create value is by selling the majority of the European frozen food businesses."
Unilever operates the frozen foods division in 11 EU countries, including France, Germany, Italy, Holland the UK. It has five sourcing units across Italy, Germany and Britain.
The firm, famous for Ben and Jerry's ice cream and Coleman's mustard, will hold on to the Italian portion of the business, using it as a testing base for American frozen products.
"It is our biggest single business in Italy and its retention plays an important role in future trade relations in that country. It is also an important source of innovation and technology in the attractive frozen meals segment that is proving so successful in the US," Cescau said.