Shares in Patties Foods have soared after the pies and frozen desserts supplier received a $230 million non-binding, incomplete takeover proposal from private equity firm Pacific Equity Partners (PEP).
Patties shares were 31 cents, or 23.31 per cent, higher at $1.64 at 1105 AEST, after coming out of a trading halt.
PEP has offered to pay $1.65 in cash for each Patties Foods share, including any dividends paid after the proposal date.
Also, an unquoted equity alternative is possible.
The price represents a premium of 31.3 per cent to the volume-weighted average price of Patties shares during the one month leading up to, and including, May 27 of $1.26.
Patties chairman Mark Smith said Patties is in advanced talks with PEP.
"The board remains confident in management's plans for growth in the core brands, and the business is experiencing strong momentum," Mr Smith said in a statement on Monday.
Patties advised shareholders not to take any action in relation to the PEP proposal.
The company's brands include Four'N Twenty, Patties, Herbert Adams, Nanna's and Chef's Pride.
In February, Patties booked an 11.8 per cent drop in its first-half net profit to $7.2 million.
The company was forced to recall its Creative Gourmet and Nanna's frozen berry products in February 2015, which affected subsequent sales, and, consequently, profit.
Patties has decided to exit the frozen fruit sector and concentrate on its profitable core bakery business of savoury and sweet pastry products.
The firm completed the sale of Creative Gourmet in December 2015 and anticipated that all Nanna's Frozen fruit stock would be sold by around this May.
Patties' core brands - Four'N Twenty, Herbert Adams and Nanna's Sweet Pastry - all lifted sales in the six months to December 31, 2015.
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