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U.K.-based automotive software company Pinewood Technologies Group PLC confirmed Thursday that it is in discussions with private equity giant Apax Partners LLP over a potential acquisition that could value the firm at £583 million ($802 million).

The talks come amid a surge of investor interest in cloud-based platforms for automotive retailers and original equipment manufacturers.

Terms of the Potential Offer

Apax is reportedly prepared to propose a cash offer of 500 pence per share for all of Pinewood’s outstanding stock. The board of Pinewood said it is “minded to recommend” the deal if a formal bid is made, having reviewed the terms with its financial and legal advisers.

Pinewood stressed that no firm offer has yet been made and there is no guarantee that the discussions will result in a completed transaction. Under rule 2.7 of the U.K. City Code on Takeovers and Mergers, Apax has until Feb. 26 to submit a firm offer, though the deadline can be extended with the regulator’s consent.

The potential deal would allow shareholders to receive unlisted partial shares instead of cash if preferred. Apax could also modify the mix or value of consideration, including adjustments triggered by competing proposals or special dividends declared by Pinewood.

Market Reaction and Strategic Moves

Pinewood’s market capitalization currently stands at £443.7 million, making Apax’s potential bid a 31.4% premium. Shares surged more than 23% in early Friday trading, rising from 385.5 pence to 475 pence.

Pinewood has been expanding aggressively in the U.S. market. In June, the company acquired a 51% stake from car dealership Lithia Inc. in their joint venture for $76.5 million to accelerate adoption of its software among auto retailers in North America.

The Birmingham-headquartered company provides cloud-based platforms that streamline operations for automotive dealerships and original equipment manufacturers, an area increasingly critical as dealers modernize sales and service processes.

Outlook

While Apax and Pinewood have not commented further, a deal would mark a major milestone for the U.K. tech company, potentially fueling international growth and strengthening its position in the competitive automotive software market.