Shares in Northern Foods today soared 15pc after its management backed a £342m (€402m) buy-out offer from the owner of the Harry Ramsden's fish restaurants.
Ranjit Singh Boparan's last-minute offer on Friday for the Goodfella's Pizza and Fox's biscuits manufacturer prompted its management to ditch a previous deal involving a merger with sandwich maker Greencore.
The Irish firm said it is considering its options and according to the Financial Times may return with a sweetened offer for Northern.
Northern's shares rose to 72.5p, broadly in line with Mr Boparan's offer price of 73p per share.
Mr Boparan wants to combine Northern with his other food businesses, including chicken producer 2 Sisters, to create a major player in the food industry with £2bn (€2.35bn) of annual sales.
Previously, Northern's management recommended that shareholders vote for the merger with Greencore they announced in November that would see the creation of a new company Essenta Foods. But now they are backing Mr Boparan's cash offer.
Mr Boparan's cash offer is at a 61.3pc premium to the closing share price of 45.3p per share on November 16 when the merger was announced and more than 10p in excess of Friday's closing share price of 62.8p.
Northern Foods chairman Anthony Hobson described Mr Boparan's offer, made after a two-hour extension to a deadline from the Takeover Panel, as "compelling".
Greencore and Leeds-based Northern had agreed to create a new company with annual sales of £1.7bn and cost savings of £40m a year.
Shares in Greencore, which has around 7,000 staff and 17 manufacturing facilities in the UK, were down 5pc today.
Greencore said the merger still represented "a compelling opportunity for value creation for both Greencore and Northern Foods shareholders".
The Financial Times said that any new offer from Greencore would include a cash element, although it is unlikely to return with a full cash bid.
Northern is one of the biggest suppliers of own-label products in the UK, with sales of £977m last year.
It makes pies, sandwiches, salads, puddings and ready meals from sites including the Gunstones Bakery near Sheffield and its Fox's biscuits factory near Preston.
Bromwich-based 2 Sisters specialises in supplying raw chicken and prepared chicken products, with brands including Buxted Original and The Devonshire Red.
It has 11 factories in the UK, seven in Holland and one in Poland, employing a total of 7,000 people. The group's most recent earnings totalled £46m on sales of £739m.