London Briefing: A glance through the takeover documents for RHM from its rival Premier Foods is like taking a trip down memory lane, to a happy teatime years ago when mum would dish up Fray Bentos and Smash with lashings of Bisto, followed by - if you were good - a slice of Mr Kipling's Battenburg cake.

The agreed £1.2 billion (€1.78 billion) takeover of RHM this week by the acquisitive Premier Foods brings together some of the best-known names in the grocery business, from Premier's Branston pickle, Oxo stock cubes, Ambrosia creamed rice and Bird's custard to RHM's Hovis, Mother's Pride, Paxo stuffing and Saxa salt.

But the deal is not merely a monument to nostalgia - with combined annual sales of £2.6 billion, this powerhouse of iconic grocery brands will become a new force in the UK food manufacturing industry.

More than 90 per cent of its sales will be in the UK, and it will have market leadership positions in a number of key sectors, including bread, cakes, spreads, gravys and stocks. Although smaller than RHM in terms of sales, Premier's market capitalisation overtook that of its older rival when it bought up the UK and Irish operations of Campbell's soups in a £460 million deal earlier this year.

That leap in value enabled Premier to take the driving seat in the merger with RHM, which will see Premier shareholders owning 59 per cent of the enlarged company.

Terms of the deal are predominantly paper, with around three-quarters of the purchase price to be paid for by new Premier shares.

The deal is certainly good news for shareholders in RHM. Before the bid, worth just over 352p a share when launched, RHM was languishing below its flotation price of 275p.

Formerly Ranks Hovis McDougall, the group has had a chequered stock market history. Taken over by the Tomkins conglomerate in the 1980s, it later went into private equity ownership and was then refloated last year.

However, its share price was badly hit by a post-flotation profits warning, compounded by the recent surge in wheat prices, which has hit margins at its milling and baking operations.

The RHM deal is Premier's Foods' sixth, and by far the largest, deal of the past four years. It will take its debt up to around £1.5 billion and will also substantially increase the number of shares in issue.

All of that might have been expected to cause some indigestion in the Premier price, but instead the shares gained almost 5 per cent after Monday's announcement.

The market has been impressed with the way in which Premier's chief executive Robert Schofield has injected new life into much-loved but somewhat tired British brands and is betting that he will do the same with RHM's portfolio.

Schofield is already talking of extending the £350 million a year Hovis bread brand into cereals and biscuits and there will be similar moves throughout the RHM business.

Then there are cost savings that can be pushed through - as much as £85 million a year by 2009, although analysts reckon that this is a conservative estimate.

But perhaps the most crucial result of the merger will be the increased clout that the enlarged company will have in its dealings with the all-powerful UK supermarket groups.

They have been building their profits in recent years by squeezing ever more favourable terms from suppliers. Companies such as Northern Foods have had severe difficulty in passing on price increases to their supermarket customers but, as the biggest food producer in the country, Premier/RHM will have a far more favourable negotiating position.

UK to top million dollar homes list

Within the next 10 years, more than one-quarter of UK households - eight million homes - will have acquired dollar millionaire status, according to estimates from Barclays.

The growth will outstrip any other G7 economy, making the UK home to the highest concentration of $1 million households around the world.

In comparison, in the US the proportion of $1 million households will be 16 per cent and in Japan it will be 22 per cent.

The figures, in a report for Barclays' wealth management arm by the Economist Intelligence Unit (EIU), also predicts that by 2011, there will be as many as one million "super-millionaires" in the UK.

These it defines as individuals with assets of over $3 million. And, in the layer beneath that, there will be millions of what it calls "nearlionaires".

Nearly isn't really good enough, however - and neither is a million, particularly when counted in the ailing US currency, which is rapidly heading for 50p status against sterling.

Becoming a dollar millionaire might give millions of Britons a nice, warm glow, but it is unlikely to change many lifestyles, as most of them will make the million mark only by including the soaring value of their homes.

And, as any real millionaire will tell you, such titles only count if you can write a cheque with six noughts on it.

Fiona Walsh writes for the Guardian newspaper in London