The deal will end 90 years of independence for the Leeds-based group, which sold its Monopoly and Cluedo games division to US toymaker Hasbro for just pounds 50m five years ago.
During a difficult period in the 1980s Waddington fought off four hostile bids including two from the late Robert Maxwell.
Now a packaging group, Waddington has issued three profits warnings this year and effectively put itself up for auction in September when it announced it was in talks concerning a possible management buy-out.
Waddington shares rose 56.5p to 275p yesterday . John Mansfield shares closed up 1p at 8p.
John Mansfield is chaired by former Fisons' chairman Stuart Wallis and backed by shareholder activists Julian Treger and Brian Myerson. Their Active Value Fund has campaigned for shake-ups in companies such as Signet, Scholl and Liberty.
Mr Wallis said: "We aim to reposition Waddington as a more focused group; those businesses with growth opportunities will be identified and developed." He added that Mansfield was on the look out for further acquisitions. "There is a clear need to effect consolidation within the sector," he said.
Mr Wallis said Mansfield would conduct a three-month review of Waddington's operations. Units which were not seen as core to expansion would then be sold off. He said the company would not comment on potential job losses until the review was complete.
Analysts said the most likely candidate for disposal was Lermer, Waddington's US pharmaceutical packaging division, where a pounds 2.5m stock shortfall was recently discovered.
Waddington's major shareholders; Phillips & Drew Fund Management, Aberforth Partners and Aberforth Unit Trust Managers, who together hold a 19.1 per cent stake in the group, have granted their irrevocable approval to the deal.
Analysts said it was "possible but unlikely" that a counter-bidder would emerge. One said: "The company is suffering from a huge lack of credibility. There are skeletons left, right and centre."
Mansfield has offered 28.6 new Mansfield shares and 100p in cash for each Waddington share, valuing each Waddington share at 300p. The offer represents a premium of more than 48 per cent above Waddington's closing share price of 202p on 17 September, the day before it revealed it had received a preliminary takeover approach.