Private equity group Inflexion is in talks to buy global law firm DWF.
Under the terms of the proposed deal, DWF's shareholders would be entitled to receive a total consideration of 100p per share.
DWF shares have fallen about 19% in this year. Its shares closed at 65.50p on Friday, giving the group a market value of £224m.
Shares in the firm jumped by more than 30% shortly after the potential deal was revealed.
"DWF has confirmed to Inflexion that should a firm offer be made by Inflexion on the financial terms of the proposal, it would be minded to unanimously recommend it to DWF shareholders, subject to the agreement of other terms and conditions," read a stock exchange statement.
"The announcement of a firm intention to make an offer remains subject to the satisfaction or waiver (by Inflexion) of a number of pre-conditions, including, inter alia, completion of satisfactory due diligence, receipt of irrevocable undertakings to vote in favour of the transaction and to elect to receive the partial loan note alternative or to elect to receive the reinvestment alternative from certain key DWF partners, and agreement of the detailed terms of the proposal.
"Discussions between DWF and Inflexion are ongoing and there can be no certainty that an offer will be made, even if the pre-conditions are satisfied or waived."
DWF has UK offices in Edinburgh, Glasgow, Manchester, Belfast, Birmingham, Bristol, Leeds, Liverpool, London and Newcastle.
In the 12 months to 30 April 2022, DWF's revenue totalled £416.1m, while it made a pre-tax profit of £22.3m. In the six months to 31 October 2022, the group's revenue was £212.1m and its pre-tax profit was £12.9m.
For its latest financial year, DWF said it expects to report a net revenue of around £380m.
Inflexion's portfolio currently includes the likes of Mountain Warehouse, while it is a previous backer of Goals Soccer Centres, Jack Wills and On The Beach.
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