Clayton, Dubilier & Rice (CD&R) said on Tuesday it would pay 108 pence a share in cash for Huntsworth, which provides marketing and medical communications services to pharmaceutical companies.
That's a 50% premium to the stock's closing price on Monday.
However, Huntsworth shares surged beyond the bid price to as high as 110.7 pence, suggesting some investors think a counter-bid is possible for the fast-growing British firm.
"This looks an excellent price for the bidding company" said Peel Hunt analysts, who have a target price of 120 pence for Huntsworth shares. "This modest valuation ... (leaves) the door ajar for speculation on the potential for a competing approach".
CD&R said Huntsworth's underlying markets, the United States and Europe, were attractive and underpinned by stable pharma industry trends, adding it intended to help Huntsworth with future acquisitions.
"Our vision for Huntsworth is shared with management, who have demonstrated an ability to drive organic growth and execute accretive add-on acquisitions," said Liam Fitzgerald, adviser to CD&R funds.
In a separate statement, Huntsworth reported a 27% jump in pretax profit for 2019, as its communications division returned to growth and its medical arm went from strength to strength.
"Healthcare remains our focus for growth and investment, as it continues to be a fast-growing sector led by increasing global demand for new drugs to help ageing populations," said Huntsworth chief executive Paul Taaffe.
"This demand is driving a complex marketplace that requires a combination of higher margin consultancy services, medical affairs and more effective marketing".
The acquisition is the latest by a U.S. private equity firm in Britain, where a drop in the value of the pound has spurred dealmaking since the country voted to leave the European Union.
Buyout firm Advent, for example, is taking British defence and aerospace group Cobham private, while Blackstone is buying Madame Tussauds owner Merlin.
Huntsworth's directors were advised by Rothschild & Co on the financial terms of the deal, while BofA Securities, Houlihan Lokey and RBC Capital Markets were among advisers to CD&R.
By Yadarisa Shabong