Shares in Stadium Group surged on Thursday after it agreed to be bought by TT Electronics for 120p per share in cash, or around £45.8m.
The price represents a premium of around 44% to Stadium's closing price of 83.50p on Wednesday and the deal, which is expected to be immediately earnings-enhancing for TT, will be funded entirely from existing cash resources and committed bank facilities.
The Stadium directors advised by N+1 Singer, consider the terms of the transaction to be fair and reasonable and intend to unanimously recommend that shareholders vote in its favour.
This is the first acquisition by TT following the disposal of its transportation sensing and control division last year, and follows its stated strategy to focus on areas of structural growth where there is increased electronic content and greater product differentiation.
TT said the deal will give it a greater presence in attractive segments of the industrial, medical, aerospace and defence and transport sectors and will enhance its product capabilities in power electronics and connectivity, adding more scale to the respective businesses of both TT and Stadium.
It will also enable extended research and development capabilities, building on Stadium's R&D resources to leverage new product innovation and accelerating new product launches to market.
TT chief executive officer Richard Tyson said: "The acquisition of Stadium is an important step to accelerate our strategy of building leading positions in sectors where increasing electrification is fuelling demand for our highly engineered electronic solutions.
"We look forward to welcoming Stadium's employees and combining power electronics capabilities and R&D expertise to drive growth for the combined business. Stadium will add complementary technologies including connectivity offerings, in industries we already know well. We remain committed to deploying our resources to accelerate growth through capital investments and acquisitions to enhance TT's potential and create value for our shareholders."
At 1000 GMT, Stadium shares
were up 43% to 119.02p and TT Electronics was up 2.4% to 215p.