Shares were climbing 27.5% to $26.02 in early trading.
Magnachip's board unanimously approved the deal, which is expected to close in the second half of the year.
Magnachip said it has an agreement with South Dearborn Limited and Michigan Merger Sub, which are investment vehicles set up by Wise Road Capital and certain of its limited partners.
Under the agreement, shareholders will receive $29 in cash for each share of Magnachip's common stock they currently hold.
This represents a premium of about 75% to Magnachip's three-month, volume-weighted average share price, and about a 54% premium to its unaffected closing stock price on March 2, the last trading day before media reports emerged of third-party interest in acquiring Magnachip.
Magnachip's management team and employees are expected to continue in their roles, and the company will remain based in South Korea in the cities of Cheongju, Seoul and Gumi. The company has about 900 employees.
Headquartered in Beijing, Wise Road Capital describes itself as "a global private equity fund manager, focusing on investments in semiconductor and other high-tech industries."
The company, which was founded in 2016, said in a statement that it intends to help Magnachip grow internationally.
Earlier this month, Needham analyst Rajvindra Gill noted that Pulse by Maeil Business News Korea reported on March 3 that MagnaChip was rumored to be in talks for a sale to either a Korean or foreign party, according to the Fly.
Gill performed a sum-of-the-parts analysis that suggested that the company could be worth $41-$46 per share in a deal with its current revenue mix.
Gill, who said he feels MagnaChip "is a heavily discounted story to begin with," maintained a buy rating and $30 price target on the shares.