A Baxi announcement said: “This agreement follows the earlier announcement of discussions between the two companies.
“Consistent with the earlier announcement, the transaction involves a share exchange with new equity of €100m being invested in the combined group by Baxi Group's shareholders (funds advised by BC Partners and by Electra Partners).
“Remeha Group will hold a majority of the equity in the new combination.”
The merger is now dependent on Government approval and the agreement of lenders “to retain in full and amend the financing arrangements of the two companies.”
Baxi said initial discussions with debt providers have been “encouraging” and it hopes the deal will be finalised during the second half of 2009.