The investors said in a statement on Friday that Scout24's management and supervisory board supported the sweetened bid of 46 euros a share. Last month, the German company rejected an offer of 43.50 euros per share.

Scout24 shared jumped 11.8 percent in Frankfurt to 46.38 euros, above the offer price and suggesting some shareholders reckon a better alternative offer may yet emerge.

"We think this bid values Scout24 at too low a multiple and raises the possibility that industry peers may look to buy some or all of the assets," analysts at Liberum said in a note.

They speculated a rival media house, such as Germany's Axel Springer, Norway's Schibsted or South Africa's Naspers might be willing to pay a higher price for Scout24 than the private equity.

Springer, which has its own German real-estate classifieds business, might have to dispose of that part of Scout24's operations if it does do a deal to avert any possible antitrust concerns, they added.

Schibsted, which is spinning off its own digital classifieds business, would probably have to ditch Scout24's Spanish auto classifieds business for the same reason.

The Scout24 deal comes amid a broader shakeup in the European media landscape, as companies seek to realise value by carving out or merging their digital classifieds businesses that are faster growing and more profitable than their media titles.

Scout24 has the attraction of being a classifieds pure play, enabling it to command a valuation of 17 times estimated 2019 earnings before interest, taxation, depreciation and amortisation (EBITDA).

Still, that is shy of the estimated 20 times EBITDA Silver Lake paid in its $3 billion (£2.3 billion) takeover of ZPG, owner of UK property sites Zoopla and PrimeLocation, last May.

Hellman & Friedman and Blackstone said their offer was subject to a minimum acceptance threshold of 50 percent plus one share.

PRIVATE EQUITY RETURNS

Scout24, best known for its ImmobilienScout24 home listings in Germany and AutoScout24 car listings across Europe, was previously owned by Hellman & Friedman, which acquired a controlling stake from Deutsche Telekom in 2013 before listing the business in 2015.

The company's rise has coincided with a boom in the German real estate market driven by ultra-low interest rates, urbanisation and the attraction to economic migrants exerted by Europe's largest economy.

Other groups have also vied to buy all or parts of Scout24.

After receiving an approach last year, Scout24 hired investment bank Morgan Stanley to explore its options.

Among other proposals, German used-car dealing platform Auto1 suggested a deal for Scout24's car listings business, sources close to the matter had said last month.

Despite having well stocked war chests, private equity funds have found it difficult to invest without overpaying due to rich equity market valuations.

In Germany, the private equity takeover of generics maker Stada, which became significantly more expensive after arbitrage funds like Elliott came in and demanded a cut, has also deterred public-to-private deals.

A recent stock market correction, though has encouraged buyout groups to seek such deals. Separately, Bain and Carlyle are currently weighing an offer for lighting group Osram.

Blackstone said in January its dry powder - the amount it has raised from investors but yet to invest - had hit $112.9 billion, and President and Chief Operating Officer Jonathan Gray said recent market volatility had created a buying opportunity.

(Reporting by Vera Eckert and Arno Schuetze; Editing by Riham Alkousaa and Mark Potter)

By Arno Schuetze and Douglas Busvine