The British food manufacturer will acquire Campbell's category-leading brands including Oxo, Batchelors, Homepride and Fray Bentos, taking Premier's total branded sales mix to 69 per cent.
Commenting on the purchase, Premier's chief executive Robert Schofield said: "The Campbell's UK business fits Premier like a glove. This acquisition will bring an excellent portfolio of powerful and iconic brands which we intend to drive forward with increased resource and innovation."
The deal forms part of management's business development strategy to drive growth in three areas: leading brands, better consumer relationships and cost savings.
It is to be financed by an underwritten rights issue, overseen by Merrill Lynch, which Schofield described as a "highly compelling" financing structure.
This will leave the manufacturer clear to make further acquisitions of "great British brands", Schofield added.
Speculation is mounting that the firm will take a controlling share in United Biscuit's northern European operations, in combination with a Dutch investment bank.
Premier's UB wish-list is thought to include top-selling British brands Jaffa Cakes and McVitie's, but neither firm will comment on the bid.
The firm's current acquisition criteria include brands that will reinforce the group's labelled sales mix with category-leading positions, while maintaining a strong UK focus with minimal risk - and UB's northern European snacks business may just tick all the right boxes.
Since 2002, Premier has acquired Nestle and Unilever's British ambient food businesses, Kraft's UK desserts business, Gedney's fresh vegetable supplier and more recently meat-free convenience brands Quorn and Cauldron Foods.
Premier Foods said last week it expects to deliver strong half-year profits as sales of household names Branston and Ambrosia perk up, and the newly acquired Quorn brand enjoys a double-digit rise in demand.
In a trading statement for the six months to 1 July, the food group said it expects like-for-like sales growth to be in line with expectations, supported by the strong performance of several key brands.
Overall, Premier Foods reported a 2005 group turnover of £789.7m, up six per cent from 2004's £744.7m.