The directors of the online trading and advertising site Trade Me are favouring being taken over by a British investment firm.
Trade Me website Photo: RNZ
The board has agreed the broad outline of a $2.6 billion deal with Apax Partners, which has increased its offer by 5 cents to $6.45 a share.
Trade Me chairperson David Kirk said the board believed the Apax deal offered shareholders the best outcome and company the best future.
"We're confident Trade Me would have a successful standalone future, but we believe the certainty of the cash offer and material premium would be an attractive outcome and it merits being put to shareholders with our recommendation, in the absence of a superior proposal."
Last week, US investment company Hellman and Friedman emerged as a rival bidder offering $6.45 a share, but there was no immediate reaction from it nor comment from Trade Me about the rival bid.
Apax is being given the inside running with exclusive conditions which include restrictions on Trade Me shopping around for a better bid, although the door has been left open for a better bid.
"The Trade Me Board (can) engage on a competing proposal which is - or is reasonably capable of becoming - a superior proposal, subject to notifications being made to Apax ... right to match any such proposal," Trade Me directors said.
If the Apax deal falls through Trade Me may have to pay a $19.2m break fee.
Trade Me said it has been told Apax is going to fund the deal from its own resources and borrowing.
The takeover is being done by a scheme of arrangement, which requires a lower level of shareholder approval.
Information on the full offer will be sent to Trade Me shareholders next year with a vote tentatively set for April.