The buy-out is being lead by chief executive Chris Etherington, and under the terms of the deal the existing management team will remain in place, with Christopher Adams as non executive chairman.

In documents released under the rules governing such deals, the company explained that since the previous MBO in 2002, more than a third of the shareholders in the company had either retired or left. It said it wished to reorganise its structure so that it could more effectively incentivise management and employees through direct ownership of the business.

It said: "The current management team and a large number of employees will, subject to completion of the proposals, be given an opportunity to increase their equity stake in P&H through the Employee Subscription Scheme. In this way the culture of management and employee ownership of the business will be maintained which in the board's opinion, is and has been a major contributing factor to the success of P&H."

Under the deal, which will be completed on March 28, P&H shareholders will receive the equivalent of 600 pence per share, in new shares and cash. The company said the new holding company had secured facilities totalling £330m for the purpose of financing the proposals, and refinancing the group's existing debts.

Etherington said: "I am delighted to be able to lead the proposed restructuring of the share ownership of P&H which will create significant share ownership opportunities within the group. We are well positioned to build on the strong heritage of P&H and very much look forward to implementing the group's growth strategy alongside my team."

Adams said: "I am pleased that these proposals allow existing P&H shareholders to realise a significant proportion of their investment, retain an ongoing income and participate in any future growth in the value of the new group. They also give the current generation of management and employees the opportunity to increase their stake in the business."

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