Baked food group Aryzta has started what it calls "exclusive negotiations" for a strategic investment with Lion Capital in a speciality premium French food business.
Under the terms of the agreement, Aryzta would buy a 49% shareholding in Picard for €446.6m.
The company said the deal will be mainly funded by the net proceeds from its share placement in Origin Enterprises.
Last week, Aryzta sold down a large portion of its shareholding in Origin, netting it over €400m. It also recently divested its Carroll Cuisine unit for a sum believed to be about €40m.
Under the terms of the deal, Aryzta has the right to acquire 100% of Picard in three to five years.
Picard has a strong retail presence in France and commentators said that Aryzta now want to internationalise the brand.
"The investment in Picard is consistent with Aryzta's strategy of consumer relevancy through diversifying markets and channel positioning," commented the company's chief executive Owen Killian.
He noted that Picard has delivered consistent revenue, EBITDA and market share growth over the past 40 years.
He said that Picard is a "highly predictable business" and an ideal replacement for Aryzta's Origin holding, which allows it to strategically move up the value chain.
Shares in Aryzta were 8.7% lower in Dublin trade following the announcement.