The group, which includes Iceland, cash and carry chain Booker and Woodward Foodservice, will be broken up by Giant TopCo, a consortium led by Baugur, which also includes Karen Millen founder Kevin Stanford and D2 and Office boss Tom Hunter.
In a complex deal Giant TopCo will then sell most of the Big Food Group property to another consortium, PropCo, which also includes Baugur and Hunter. Following restructuring Iceland will be sold to a third consortium and managed by Malcolm Walker and Cooltrader chief executive Andy Pritchard.
BFG chief executive Bill Grimsey said: 'We believe these proposals offer shareholders fair value and the certainty of cash today and are therefore recommending that shareholders accept them. We are mindful that, despite the successful execution of our strategies for our businesses, the sectors we operate in are highly competitive and conditions are not getting any easier.'