Shareholders in Misys, the banking software group, are being urged to "take no action" over a £1.27bn buyout from Vista Equity Partners.
The board of Misys has agreed a deal with Vista, which wants to merge the British group with Turaz, previously a division of Thomson Reuters.
But activist investor ValueAct, whose 21% stake makes it the largest Misys shareholder, had already announced its intentions to team up with private equity giant CVC Capital to make a counter-offer.
"CVC and ValueAct continue to consider their options in respect of Misys," the firms said in a statement on Monday morning, "including a possible recommended joint cash offer for the company and urge Misys shareholders to take no action at this time."
The Vista offer values the British banking software group at 350p a share and comes a week after Temenos, its Swiss rival, ended talks about an all-share merger.
The purchase represents a 32% premium to the 265p average share price for Misys over the three-month period before Misys declared its talks with Temenos. But it is lower than the reported 400p a share US group Fidelity National Information Services offered last summer during aborted takeover talks.
The board, advised by Barclays and JP Morgan Cazenove, has pledged to support Vista's offer, which has backing from two of its largest shareholders, Schroder Investment Management and Threadneedle Asset Management, who represent 21.8% of the capital. However, if a competing offer increases the acquisition value by 10% or more the investment funds have the right to withdraw their support.
The acting Misys chief executive, Tom Kilroy, downplayed the possibility of a better offer, saying: "We think this is a good deal for the shareholders and ultimately ValueAct is a shareholder and is economically rational."
Turaz is the former Thomson Reuters trade and risk management software business, acquired by Vista in September and renamed under new management on 1 February. It is headquartered in London and run by Bret Bolin, who has led a number of software companies owned by Vista over the last 12 years.
Misys has been without a permanent chief executive since Mike Lawrie, a former IBM executive, left during the sale process to run another software group, CSC. Kilroy, who is general counsel at Misys, has taken the helm on an acting basis.
Asked whether the merger with Turaz would lead to job losses, Kilroy said: "The direction of travel is the other way. Vista buy and grow software companies. The way they operate is to make companies more successful by sharing best practice about how to run them well."
Detailed staff planning and a decision on the chief executive would take place between now and when the deal closes, he added.
Vista has $6bn (£3.8bn) under management and specialises in buying up enterprise software. It has so far spent $14.8bn on 68 businesses in this field, including Turaz.
Vista's chairman and chief executive, Robert Smith, said: "Through our deep experience with enterprise software companies, we believe that Misys has an attractive future that we plan to invest in and grow. With the combination of Misys and Turaz, one of our existing portfolio companies, we are creating the global leader in core banking, treasury management, capital markets and enterprise risk management software headquartered in the global banking centre, London."
Misys, which has been under pressure as its banking clients cut back spending, updated the market on its third-quarter performance, saying revenues were down 12% during its third quarter, which ended on 29 February, compared with the same period last year. For the preceding 12 months, revenues were down 3%.
Order intake was down 18% in the quarter and 5% over a year, with the company saying customers "delayed, but did not cancel" software licence purchases as they awaited the outcome of the sale process.
