Japanese instant noodle maker Nissin Foods has agreed to buy a 17.27 per cent stake in Mr Kipling owner Premier Foods from US private equity firm Warburg Pincus.
The deal has been announced the day after Premier rejected a second takeover approach from US rival McCormick.
The share price of Premier fell slightly today after jumping by more than 70 per cent yesterday when it said McCormick's £496m offer undervalued it.
McCormick initially approached Premier in February with a cash offer of 52p per share. The offer was then improved to 60p per share on 14 March.
McCormick, known for its spice brands such as Schwartz, has until 5pm on 20 April to make a firm offer for Premier Foods or walk away.
Standard Life Investments, which owns around seven per cent of Premier, criticised the board's handling of the McCormick bid and Nissin stake offer.
David Cumming, head of equities at Standard Life Investments, said he wanted to company to re-engage with McCormick.
He said: “ We note with some dismay the timing of Nissin's acquisition of a stake in Premier Foods. In our view, this does not reflect well on the Premier Foods Board's objectivity and commitment regarding its engagement with McCormick and consequently its desire to pursue maximum value for shareholders.”
Cumming added: "Although we believe the 60 pence bid indicated by McCormick is too low, we remain open to a bid at a higher level. We expect the Premier Foods Board, on behalf of its shareholders, to engage with McCormick and pursue this option to the full."
David Beever, chairman of Premier said: "We welcome Nissin as a new long-term shareholder in our business.
“By gaining a strategic investor who understands and supports our growth ambitions, we have an exceptional opportunity to deliver shareholder value.
“Based on the conditional cooperation agreement we announced yesterday, we very much look forward to working with Nissin to develop ways our two businesses can co-operate to drive growth.”