The UK's Big Food Group (BFG) has said it has agreed with Baugur on the terms of a recommended takeover offer by the Icelandic group, but said certain issues still have to be finalised before a formal offer can be made.

On 30 November, BFG announced that it had received a proposal from Baugur in relation to a possible offer for BFG at 95 pence (US$1.85) per share in cash.

"Substantial progress has been made, and the terms of a recommended offer for BFG, by way of a scheme of arrangement, at 95 pence per share in cash have been agreed between Baugur and BFG, subject to the outcome of discussions in relation to financing which remain to be finalised before any offer can be formally announced," BFG said late last week.

Baugur also confirmed that if a takeover of BFG was successful, it would carry out a financial restructuring of the UK group and subsequently sell the Iceland frozen food retail business to a consortium that includes its subsidiary BG Holding. A new management team will be brought in, including former Iceland boss Malcolm Walker.