In early morning trading, the iSelect share price is up 75% to 28 cents.
The iSelect board is unanimously recommending that shareholders vote in favour of the deal.
The offer has come from Innovation Holdings Australia (IHA), which owns www.comparethemarket.com.au.
IHA is also an investment of the international private investor group, Reef Investment Consortium.
IHA already holds 26% of iSelect shares. It proposes to acquire all other shares by way of a scheme of arrangement.
What's the offer to iSelect shareholders?
IHA is offering to buy iSelect at a price of 30 cents per iSelect share held. The iSelect share price closed yesterday's session at 16 cents.
In its statement, iSelect pointed out that the offer represents an 87.5% premium to that closing price.
The deal is subject to an independent analysis to ensure the deal is in the best interests of shareholders. It will also need approval from the Australian Competition and Consumer Commission.
iSelect anticipates scheduling a shareholder vote in November.
Major shareholders back the buyout
Major iSelect shareholders Thorney Investment Group and Microequities Asset Management Group Ltd (ASX: MAM) are in favour of the deal.
Thorney is a private investment group run by stock picker Alex Waislitz. It owns 14.34% of the iSelect shares on issue and Microequities Asset Management owns 9.5%.
iSelect shareholders do not need to take any action yet. They will receive a scheme booklet in October.
What did management say?
The Chair of iSelect, Brodie Arnhold, said: "The Scheme provides an opportunity for shareholders to realise a significant premium to market value for their shares and provides the certainty of an all-cash offer."
If all conditions are satisfied, iSelect expects the scheme to be completed between December this year and March 2023.
iSelect will release its FY22 full-year results during earning season on Tuesday 23 August.