The investment arm of civil engineering group Balfour Beatty (LON:BBY) is buying Alkane Energy (LON:ALK) for about £61.4mln.
Balfour Beatty Infrastructure Partners (BBIP) has made a recommended bid for Alkane through bid vehicle Barbican Bidco.
Alkane runs mid-sized 'gas to power' electricity plants and has onshore petroleum exploration licences enabling it to run coal mine methane sites extracting gas from old pits.
It also runs power response sites connected to mains gas and produce electricity at times of high electrical demand or to balance the electricity grid.
Managing partner of BBIP adviser BBIP LLP, Rob Gregor, said it was attracted to the flexibility and diversification of generation provided by the independent power platform of Alkane.
"We see great opportunity in the business and believe BBIP is an excellent partner to support the next phase of Alkane's development," he said.
Alkane chairman Roger McDowell said: "This offer enables Alkane shareholders to realise value today in cash for their shares at a significant premium to the recent historical share price, which, in the board's view, has been impacted by negative sentiment towards the energy industry and continued regulatory scrutiny.
"BBIP have a well-respected track record in the infrastructure sector and as a patient investor, will be able to support the company's longer term growth ambitions,"
Balfour Beatty shares fell 1.8p to 253p in early London trading. Alkane's stock motored 9.75p to 34.75p.