Waterlogic is a supplier of mains-fed water dispensers and Poseidon is a newly incorporated company owned by EPIC Funds managed by Castik Capital Sárl to make the acquisition.
Under the terms of the deal, shareholders will receive 151 pence for each Waterlogic share.
This represents a 58.1% premium to the closing price of 95.5 pence per share over the three months before yesterday (Nov 11) and a premium of 32.5% to the closing price of 114 pence yesterday.
Ariel Recanati, Waterlogic's non-exec chairman, said: "Poseidon's recommended cash offer announced today provides Waterlogic Shareholders with the opportunity to exit their investment at a significant premium, while also providing Waterlogic with the solid platform it needs in order to continue its commercial and consumer investment plans and to remain at the forefront of consolidation in its industry."
Michael Phillips of EPIC Funds, added: "Waterlogic is a leading provider of POU systems with strong market positions across a range of international operations.
"Our strategy is to deploy significant capital to support the growth of the business, both organically and via acquisitions, which would not otherwise be available to Waterlogic as a quoted company suffering from limited liquidity."
Waterlogic shares rose 27.19% to 145p.