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Irish-based food producer Greencore said it will "consider its options" after Leeds-based Northern Foods accepted a £342m takeover offer from West Midlands businessman Ranjit Boparan. Northern Foods chairman Anthony Dobson said today that the Boparan cash offer was a "compelling opportunity" for his business.

Boparan Holdings released a statement this morning which said that both Northern Foods and Boparan Holdings Acquisitions (BH Acquisitions) had reached an agreement on the terms of the cash offer which values the Leeds food giant at 73 pence per share - or £342m, excluding treasury shares. It said that Northern Foods directors intend to "unanimously recommend that Northern Foods shareholders accept the offer".

It added that Northern Foods directors have now "withdrawn their recommendation of the Greencore merger".

Ranjit Boparan, chief executive of BH Acquisitions, said: "The combined group will be one of Britain's major food suppliers with a turnover of more than £2bn.

"This will create significant opportunities which will benefit customers, consumers and employees. We look forward to working with the experienced Northern Foods team and combining our skills in product innovation and customer partnerships to create a larger business with enhanced prospects."

Anthony Hobson, chairman of Northern Foods, said: "This attractive cash offer provides shareholders with an immediate premium to the value of Northern Foods within Essenta Foods, the proposed merger with Greencore we announced in November 2010.

"The bid from Boparan is a compelling opportunity for our shareholders to realise a cash exit, and as such the board of Northern Foods will be unanimously recommending that Northern Foods Shareholders accept Boparan's offer."

Rothschild and Goldman Sachs are acting as joint financial advisers to BH Acquisitions and Boparan Holdings. UBS is acting as financial adviser and broker to Northern Foods.

But Greencore responded this morning.

In a statement to the Stock Exchange, it said: "The board of Greencore continues to believe that a combination with Northern Foods to create Essenta Foods represents a compelling opportunity for value creation for both Greencore and Northern Foods shareholders, through the formation of a business with increased scale in the industry and the ability to deliver substantial synergies around which the board has increased confidence.

"However, the board recognises the importance attached by the Northern Foods board to the certainty of cash value in their decision to change their recommendation.

"Given this latest development, the board of Greencore will now consider its options and as part of this process intends to seek the views of both Greencore and Northern Foods shareholders. A further announcement will be made in due course."