Aggreko has made a cash offer for the entire share capital of Crestchic.
The Glasgow-headquartered temporary power solutions company has reached an agreement with the board to the Burton-on-Trent based rival.
The offer is valued at £122m, representing a premium of approximately 13% to the closing price per share of 356 pence on 8 December.
It also gives an implied enterprise value multiple of approximately 13.7 times Crestchic's earnings before tax from continuing operations of £8.9m for the 12 months ended 30 June 2022.
A stock exchange statement explained that Aggreko has a business priority to add new capabilities through merger and acquisition activity.
Crestchic's business is seen as well-aligned with Aggreko's overarching objective of supporting its customers through the energy sector's transition to more renewable sources.
Aggreko has a complementary product offering and the addition of Crestchic should help accelerate its plan to target high-growth end-markets such as renewable energy and data-centres.
Crestchic's directors, advised by Smith Square Partners on the financial terms, consider the offer to be fair and reasonable. Accordingly, they intend to recommend unanimously that shareholders vote in favour of the scheme.
It is expected that the scheme document will be published on or before 5 January, with a shareholder meeting held on or around 6 February, with the scheme then becoming effective on or around 14 February.
Peter Harris, chairman of Crestchic, said: "The board is pleased with the considerable progress made by the company following the implementation and delivery of its refocused strategy, and believes that Crestchic has the potential to generate significant value for shareholders in the long-term.
"However, the board recognises that Crestchic, as a relatively small business, could accelerate its growth and shareholder value creation by combining with a significantly larger player in related global markets.
"The offer of 401 pence per Crestchic share in cash represents an attractive, immediate premium for shareholders, and I am confident that under Aggreko's responsible long-term stewardship the business will continue to thrive."
Mike Smith, chairman of Aggreko, said: "In Aggreko, Crestchic will have a supportive and well-capitalised owner who shares their desire to execute against its long-term vision of providing solutions aligned with the changing requirements of our customers.
"We look forward to Crestchic becoming part of the Aggreko Group to provide the best platform for success for Crestchic's customers, employees and wider stakeholders"
For more than 55 years, Aggreko has provided customers across a variety of sectors with power, heating and air conditioning. It has more than 5,500 permanent employees and 159 sales and service centres to support its customers across 69 countries.
In August 2021, Aggreko was acquired by funds managed by TDR and I Squared.
Don't miss the latest headlines with our twice-daily newsletter - sign up here for free.
