Intec Telecom Systems, the UK company that provides billing services to clients including Orange and Vodafone, has agreed a takeover offer from CSG Systems worth £236.7m.
Yet, Intec's share price soared 30 per cent beyond the 72p per share offer as analysts suggested a counterbid could emerge.
Intec, which counts 60 of the world's 100 largest communications companies among its clients, revealed it was in talks over a potential takeover at the end of July. The bidder was named as the US billing services company CSG yesterday.
The companies released a joint statement saying the two boards had reached an agreement on price and Intec would recommend the offer to shareholders. General Atlantic, which holds 11.8 per cent of Intec's shares, is backing the offer.
Jon Fletcher, an analyst at Altium Securities, said: "The offer makes strategic sense, combining the businesses to create the second largest business software services provider."
Other analysts believed the bid had come in disappointingly low. Julian Yates of Investec had expected the bid to be as much as 90p per share, saying, CSG's "low" bid could "prompt hopes of a counter offer". Yet the analyst dampened such hopes, saying Intec "has been on the block for a while".
Tintin Stormont, an analyst at Singer Capital Markets, would not rule out a counter-bid, saying other big US players operating in the sector, including Oracle, Amdocs and Converse, could be interested.
CSG claimed the merger would create "a leading provider of business support systems solutions serving the worldwide communications industry".
Peter Kalan, the president and chief executive of CSG Systems, said: "The communications industry is dramatically changing. Consumers have more choices for content, devices and providers. This has created an opportunity for service providers to differentiate their offerings by being more flexible and responsive to the end consumers."
Andrew Taylor, chief executive of Intec, said it was a "major event" in the business software services market. He added: "Given the increasingly difficult market conditions, and the importance of scale and relevancy to our customers, this combination represents a good deal for Intec."
In March, Intec revealed it was struggling, admitting it had been hit by deferrals as customers tightened their belt. This culminated in the loss of a "major non-traditional customer," which terminated a contract in August. The exposure to Intec's 2010 profits could be up to £4.1m, it said.
The trading update prompted several analysts to downgrade their full year expectations for profits.