Premier Foods will buy RHM for 1.23 billion pounds ($2.4 billion) in cash and shares to create Britain's biggest food producer.
Under the terms of the deal, which has been recommended by RHM's board, Premier will pay one new share and 83.2 pence ($1.65) for every RHM share, Premier said in a statement. That values RHM's shares at 352.45 pence ($6.98) each, a premium of 29.7 percent over the stock's closing price on Friday.
RHM shareholders will hold 41 percent of the enlarged company, and Premier shareholders 59 percent.
"This acquisition brings Premier more great British brands with leading category positions which fit naturally in our portfolio," said Robert Schofield, the company's chief executive.
Premier Foods' brands include Branston pickle, Sunpat peanut butter and Quorn meat substitute.
The two companies have combined annual sales of 2.6 billion pounds ($5.15 billion), 93 percent of it in the United Kingdom.
Clive Black, an analyst at Shore Capital, believes Premier paid too much to buy into a lower-quality business.
"The management might be too keen to do a deal after failing to get United Biscuits," Black said.
In early trading on the London Stock Exchange, Premier shares rose 10.3 percent to 297 pence ($5.88), while RHM shares were up 38 percent at 375 pence ($7.43)