Keywords Studios PLC (AIM:KWS, OTC:KYYWF) said investment firm EQT Group has tabled a 2,450p per share, £2 billion offer for the business, which it is minded to recommend.
To finalise transaction documentation, the "put up or shut up" date (deadline for making a formal bid) has been extended to July 3 at 5 p.m.
In the same announcement, Keywords expressed confidence in delivering strong revenue and profit growth this year, although its performance is likely to be second-half weighted.
This comes as the sector emerges from the slower content creation trends that are currently dampening industry spending.
"We have had a small number of larger game development projects deferred to the second half or canceled, creating capacity gaps in Create which were unable to be filled at short notice," it told investors.
"This, together with ongoing softer demand in Globalize and the relatively slow ramp-up in content production in Hollywood, has meant that first-half organic growth is now expected to be slightly negative."
In the update, it added that it is seeing "increasingly positive signs" across the industry, with spending from larger clients continuing to grow strongly, allied with the recovery following the end of strikes in the US.
As a result, second-half organic growth is expected to be around 10%, which is in line with medium-term guidance.