Its new 8,000sq m unit will employ more than 200 people and is close to the firm's existing site in Milton Keynes. The first phase of investment is scheduled to start operation in May 2011.
The cold bakery will comprise two separate lines for manufacturing pre-proven dough as ready-to-bake Danish pastries, for in-store bakeries and caterers. All production will be distributed through sister company Bakehouse, which currently takes its products from a Unibake factory in Denmark.
Martin Jones, sales and marketing director, said: "Once the new factory has opened, all of the company's Danish pastry requirements will be produced locally in the UK. In the medium-term we will still be importing some Viennoiserie."
He added that the factory had been designed to meet all current and future demand: "Lantmännen already has a large customer base for these products in the UK but is always receptive to new business opportunities."
Lantmännen Unibake UK supplies frozen breads to the UK foodservice sector and completed the takeover of Bakehouse in July. UK CEO Søren Landtved, said: "The UK is Lantmännen Unibake's single biggest market. Moving our production base from Denmark to a local UK site will greatly benefit our overall growth opportunities here."