Keywords Studios gets sweetened takeover proposal from EQT

The revised offer of 2,450p per share in cash was up from a previous 2,430p.

"The board has carefully evaluated the updated possible offer with its financial advisers and concluded that the updated possible offer is at a value that the board would be minded to recommend to Keywords Studios shareholders, should a firm intention to make an offer pursuant to Rule 2.7 of the Code be announced on such financial terms, subject to the agreement of all other terms and conditions of an offer," it said.

Keywords has requested an extension to the ‘put up or shut up’ deadline, meaning that EQT now has until 1700 BST on 3 July to either announce a firm intention to make an offer or walk away. The deadline was originally set for 1700 BST on 28 June, but has been pushed back in order to "finalise transaction documentation", Keywords said.

At 1100 BST, the shares were up 5.9% at 2,306p.

Russ Mould, investment director at AJ Bell, said: "Projects have been deferred or cancelled due to weakness in the gaming sector, clouding the near-term outlook for the business. Under normal circumstances this would have been a straight warning, but Keywords’ shares have jumped to trade closer to the new takeover proposal of £24.50 per share.

"The market appears to have been worried about the takeover’s chances from the get-go because the share price continuously traded well below the initial £25.50 proposal. We still don’t have a firm offer, but the fact the board is minded to recommend the new lower price sends a signal to shareholders that this might be the best offer they get."