Shares in the London-listed firm jumped 43% to 118.4 pence, above the 115 pence per share offer, as the company said its board plans on unanimously recommending the deal to its shareholders.
McCarthy & Stone said the offer, which represents a 38.6% premium to its stock's closing price of 83 pence on Thursday, would help it continue growing its shared ownership offering and access finance from private capital.
The company swung to a loss in the first half of 2020 as COVID-19 restrictions on housing transactions slashed its number of completed sales.
Mastiff Ltd, the unit of real estate-focused Lone Star Funds, said it had received an irrevocable undertaking from hedge fund Anchorage Capital for 17.1% of McCarthy & Stone shares.
(Reporting by Aniruddha Ghosh in Bengaluru; Editing by Aditya Soni)