Baxi agrees merger deal

DEBT-laden UK heating products maker Baxi yesterday agreed to merge with Dutch rival De Dietrich Remeha to boost its capital position and create one of Europe's biggest heating products companies.

Private equity-owned Baxi, which had debts of around £630 million at the end of 2008, last month revealed it was in merger talks with its smaller rival. It said the combined company would have a turnover of 1.8 billion (about £1.5bn) and employ some 6,400 staff.

The deal needs to be approved by government and Baxi's main lender, Royal Bank of Scotland.

Baxi, which recently warned it was in danger of breaching cashflow and leverage covenants by the end of June, last week secured a standstill and waiver agreement on its leveraged loans. It had also warned that if merger talks with De Dietrich did not succeed by 27 June it would not be able to make £22.3m of loan repayments due on that day.

Private equity owners BC Partners acquired Baxi for £660m in 2004. The merged group will be majority owned by the Remeha Group and be the third biggest boiler maker in Europe, after Vaillant and Robert Bosch.