Countrywide, which vies for market share with Foxtons, has been trying to recover from a botched 2015 restructuring that led to four profit warnings and a deeply discounted share issue.
Shares in the debt-laden company jumped 45% on Monday after it disclosed Connells' potential offer of 250 pence a share, and were at 210 pence by 1000 GMT. The interest comes just months after a plan for an all-share merger between Countrywide and LSL Property Services was dropped by the bigger rival.
Connells confirmed it had approached Countrywide on Oct. 26 and said in a statement the estate agent needed a new management team and strategy to turnaround its business, adding that Countrywide's board had indicated it was in "urgent need of recapitalisation" to cut debt and exposure to lenders.
Countrywide's underlying net debt at June 30 was just shy of 92 million pounds, nearly double its market capitalisation of about 48 million pounds based on Friday's closing price of 145 pence.
Countrywide in October said that funds advised by Alchemy Partners had proposed investing about 90 million pounds in the company in exchange for management control following the recapitalisation.
Making the case for its offer, Connells said that the deal with Alchemy would have "resulted in Countrywide shareholders suffering material dilution", and questioned the expertise and plan of the proposed management.
Countrywide, which operates 60 high street brands, including Hamptons International, Bairstow Eves and Bridgfords, said there was no certainty on the terms of any deal, while Connell said it was still evaluating the terms of any possible firm offer.
"In the meantime, the Board will continue to engage with its shareholders to examine all potential options to deliver a sustainable capital structure for the Company and to maximise shareholder value," Countrywide said.
($1 = 0.7617 pounds)
(Reporting by Aakash Jagadeesh Babu and Pushkala Aripaka in Bengaluru; Editing by Rashmi Aich, Kirsten Donovan)
By Aakash B and Pushkala Aripaka