West Midlands financial software supplier Marlborough Stirling is to be bought by United Utilities unit Vertex Data Science for £95.3 million.
Under a recommended proposal at 42 pence per share in cash, the takeover will be implemented through a scheme of arrangement.
The price is a significant uplift on the 283/4p the shares closed on Monday night.
The firm's shareholders, who hold approximately 58.5 per cent of the issued share capital of the company, have announced that they will vote in favour of the proposal.
The announcement coincided with Marlborough Stirling releasing its 2004 results showing a pretax loss of £11 million compared with a restated profit of £903,000 on turnover of £98.8 million, down from £114.6 million.
The company said its turnover visibility for 2005 is nearly £80 million.
The firm is formed of three divisions supplying software to the life and pensions, mortgage and independent finance sectors.
Vertex is a process outsourcing company that works with clients in the UK utility, public and enterprise sectors. In 2004 it reported operating profits of £24.6 million on turnover of £386.9 million.
Chief executive of Marlborough Stirling Mike O'Leary said 2004 had been a year of significant change for Marlborough Stirling both internally, as the board reorganised and re-focused its business units, and externally, as the group reacted to a major shift in the life and pensions market.
Although the life and pensions outsourcing market is large and expanding rapidly, Mr O'Leary said the company's lack of financial scale has held it back significantly from winning new business.
He said the company has worked hard to develop a range of partnership relationships to bid for large contracts and benefit from the use of offshore resources. However, he said it was difficult to predict when the impact of the transition programme was likely to be reflected in financial results.
It was this uncertainty which led to the group agreeing to the transaction with Vertex.