Osram shares lit up markets Monday, Stocks up 12% at the German lighting group as takeover talk swirls.
Austrian sensor maker AMS says it's ready to outbid Bain Capital and Carlyle with a cash offer valuing Osram at $4.8 billion.
Osram is a leader in automotive lighting technology, and AMS believes it can build a sector heavyweight through a buyout.
The offer would beat Bain and Carlyle's 4-billion euro bid - an offer seen as too low by Osram's biggest shareholder, Allianz Global Investors.
AMS wants to diversify into sensors for self-driving cars as it works to reduce dependence on major customer Apple.
It wants to gradually phase out the consumer LED lighting business.
The offer is subject to Osram waiving a standstill agreement.
AMS has given until August 15 for that to happen, and said it would then make a formal bid.
Investors have questioned the deal.
Markets worried about AMS' debt and the difficulty of diversifying from Apple amid fierce competition and global trade tensions.
Investor unease is reflected in AMS' share price, which is 30% lower than a year ago.