UK - BC Partners backs EUR 1.7bn Baxi merger

The merger is expected to help Baxi repay its £445m debt pile. Approximately £45m of this debt is due to mature this year and, if the merger does not close, the company will be unable to repay it.

In 2007, £40m was injected into Baxi to reset its banking covenants. The company was said to have been doing better last year, increasing operating profits by nearly a third to £89.9m.

The merged group will become Europe's third-largest boilermaker with 6,400 employees and 2008 sales figures of EUR1.8bn.

As part of the deal, BC Partners has agreed to invest EUR 100m into the merged group. BC has now invested more than 60% of its EUR 5.9bn 2005 fund, putting pressure on the private equity group to raise a new vehicle. The five year investment term of the fund expires next November.

In 2004, BC bought Baxi from Electra and Candover for about £660m, leaving Electra with a small holding. After the merger with De Dietrich Remeha Group, BC and Electra will be left with a combined stake of just less than half.

The merger is still awaiting approval from Baxi's creditors.

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• Expansion
• UK / Ireland