Hayward Tyler PLC (LON:HAYT) has agreed terms of an all-share merger with fellow AIM-listed engineer Avingtrans (LON:AVG).
The offer values Hayward at 51.6p per share and a premium of around 36% to the price when talks first got underway at the end of March.
Shareholders need to approve a scheme of arrangement for the merger to go through.
WATCH: Avingtrans deal ‘the next chapter of ownership on positive and upward trajectory’ for Hayward Tyler
Steve McQuillan, Avingtrans, chief executive, said the deal was in line with its buy and build strategy.
“Since the disposal of our aerospace division, we have been working hard to pinpoint appropriate targets for the next stage of our development. Hayward Tyler and Peter Brotherhood are great businesses with enviable pedigrees, which fit perfectly with our intended development of our Energy division.
We believe the enlarged group will become a market leader in key sectors of interest - notably nuclear power and oil and gas.
Difficult year for Hayward
The agreement comes at the end of a difficult year for Luton-based Hayward, which posted a £3.3mln loss (£3mln profit) as a second half recovery was not sufficient for the pumps and motors group to overcome an especially weak first six months when the posted £6.7mln loss.
Revenues for the year to March rose to £62.7mln (£61.6mln).
Ewan Lloyd-Baker, Haywards chief executive, said: "The last year was a challenging one, characterised by different conditions from one half to another.
During the second half of the year, we began to see the benefit from the significant investment we have made over the past couple of years combined with improving market conditions beginning to be evident. Despite the first half loss, we have succeeded in communicating our improved service offering across HTG and this has resulted in the development of a healthy order book at £49.8 million.
“I am pleased that in Avingtrans we have found a company that understands the long-term nature of our business and the significant opportunities for growth within Hayward Tyler and Peter Brotherhood.
“With the major investment in our Luton-based Centre of Excellence now complete, the Peter Brotherhood brand gaining strength, momentum building in our end markets and now the financial security of the Avingtrans balance sheet, we have a solid foundation.”
-- adds interview with Ewan Lloyd-Baker--