The Swiss vaccines producer Berna Biotech is set to be taken over by the Dutch biotech firm, Crucell, for SFr591 million ($449 million).
The board of Berna said it was in favour of the takeover, according to a joint statement on Thursday.
Crucell said it would declare the bid unconditional if the Swiss company tendered at least 67 per cent of its shares.
It will offer 0.447 of its shares for each Berna share, valuing them at SFr15.72 each.
The deal is expected to close next February.
Berna's chief executive Kuno Sommer and the chief operating officer, Simon Rothen, would join Crucell's management committee. But it is not clear if the takeover would result in job cuts.
"The combination of our companies will enable us to effectively compete and achieve critical mass in operations as the leading independent vaccine player," said Crucell chief executive Ronald Brus.
He added that the main goal of the deal was to boost growth and not to save costs.
Analysts say the Crucell offer is excellent news for the Swiss vaccines maker.
"It is the best that could have happened to Berna shareholders. The negative point we'd see in this transaction is the missing cash part," Julius Bär bank said in a research note.
In August Berna warned investors that it would post a full-year net loss of more than SFr20 million.
Last year the company gave up plans to develop a vaccine against the Sars pneumonia virus. It is not clear whether it will put in a bid to produce a vaccine against bird flu for the Swiss authorities.
The latest deal comes amid increasing talk of consolidation among small and medium-sized European biotech companies.
In September Switzerland's Novartis company bought the United States vaccine producer Chiron.
Experts say the deal highlighted how the traditionally low-growth vaccine business is coming back into favour among pharmaceutical firms.
swissinfo with agencies
Berna Biotech, formerly Swiss Serum and Vaccine Institute, was founded in 1898 and has around 700 employees in Europe and South Korea.
Its shares have been floated on the Swiss stock market since 2001.
Last year the company had to abandon plans to produce a vaccine against the Sars pneumonia virus. It is currently making a loss.
Crucell was set up in 1993 under the name IntroGene and has a workforce of around 200 people.
It is listed on Euronext and Nasdaq in New York.