In selling the division, which primarily imports foreign made cheeses into Denmark and Sweden where the group operates, Arla will be selling the operations on to Delimo's main supplier.
The announcement marks the latest measure by the group to reduce its investment in the cheese market.
It is one of Europe's first leading dairy cooperatives to cut cheese operations amidst the increasing costs of obtaining raw milk.
Arla Food's vice chief operating officer Povl Krogsgaard said the sale to Lactalis made strategic sense from the company's point of view.
"We have contributed to the import of a huge variety of dairy products to chilled cabinets," he stated.
"We have now reached a stage where it is natural for the main supplier, Lactalis, to take the business further."
The deal will further expand Lactalis' presence in European cheese production, following on from the acquisition of Italian cheese exporter Galbani, last year, resulting in annual turnover for the company of €7.5bn.
The move reflects the growing pressure on dairy processors to restructure their operations to remain competitive amidst increasing raw material costs.
Just last month, Arla said it was cutting cheese production by 6,200 tonnes until the new year in a drive to better deal with a dwindling global supply of raw milk.
The group announced that production of edam, danbo, fontal, havarti and rindless cheese will all be reduced.
Arla's Tim Ørting Jørgensen said the move was not expected to be a permanent strategy and that the company would review the situation when appropriate.
"Cheese prices are set to rise so we believe that over time, production of yellow cheese will increase," he stated after announcing the cuts.
Despite this optimism over the market, the company added that it remained uncertain over the future for its cheese brands even after the new year though.
The company pointed to the fact that last month 187 of Arla's members announced their intention to leave the co-operative resulting in a reduction of 300m kg worth of milk.
The announcement is likely to mean further woes for European cheese production.
In June, Arla announced it was to cease production of emmental cheese due to the pressure from the dwindling global milk supply on its operations.