Heinz is offering $1.65 cash for each Golden Circle share, more than four times the company's previous closing price of 40 cents on the National Stock Exchange of Australia.
The Golden Circle board, along with the company's largest shareholder Anchorage Capital Partners, which holds 35 per cent of the food and beverage group, have backed the Heinz offer.
Golden Circle chief executive Craig Mills said Heinz was a leading global player in the food industry and was considered an innovator with considerable marketing know-how.
"The acquisition provides the opportunity for a complementary product range offering a wide variety of everyday consumer food and beverages under iconic brands," Mills said in a statement.
Golden Circle has commissioned an independent report from Ernst & Young Transaction Advisory Services Ltd to consider whether the offer is in the best interest of shareholders.
Established in 1947, Golden Circle manufactures more than 500 products, including canned fruit and vegetables, fruit juices, drinks, cordials and jams.
Golden Circle chairman Phillip Cave said the certainty of timing and payment of the Heinz proposal was attractive to shareholders "particularly during a period of difficult economic conditions".
Heinz Australia managing director Peter Widdows said the company was aware of Golden Circle's importance to the Australian farming community and would maintain the its existing contracts with growers.
"Our desire is to maintain contracts between growers and Golden Circle, which would benefit from potential increases in volume over time as the combined sales and marketing strength of a combined Golden Circle and Heinz is realised," Widdows said in a statement.
The transaction, to be implemented via a scheme of arrangement, requires approval from the Foreign Investment Review Board and the Supreme Court of Queensland.
The acquisition is expected to be completed by late December if it is approved by Golden Circle shareholders and regulators.
Heinz is being advised by UBS Investment Bank and Golden Circle is being advised by ABN AMRO Investment Bank.
Golden Circle listed on the National Stock Exchange of Australia in March, after the removal of the grower ownership restrictions, in a bid to provide liquidity and flexibility to shareholders.
The Brisbane-headquartered company was the focus of corporate attention in 2007, with soft drink manufacturer Coca-Cola Amatil Ltd unlisted investment company Merim Pty Ltd both launching separate unsuccessful bids for the group.
