Scottish generator company Aggreko (AGK.L) soared more than a third on Friday after it was approached about a potential takeover bid by a consortium of TDR Capital and infrastructure fund I Squared Capital.
The FTSE 250 (^FTMC) firm, which has supplied power, heating and cooling equipment at events such as the 2012 Olympics and Glastonbury festival, said it had received an offer at a substantial premium to its £1.6bn ($2.2bn) market valuation.
In a brief statement the Glasgow-based company said it had “entered into discussions with the consortium in relation to a possible cash offer for Aggreko at a price of 880p per ordinary share to be adjusted for any dividend declared or paid”.
Based on Aggreko's closing share price yesterday, the proposal represents a 39% premium.
“Discussions between Aggreko and the consortium are ongoing. There can be no certainty either that an offer will be made or as to the terms on which any offer might be made,” Aggreko added.
It comes as the latest in a string of UK companies to be taken over by private equity firms in recent months, as they look to capitalise on fluctuating valuations amid market volatility.
Last week Marston’s (MARS.L) confirmed it received an “unsolicited” takeover bid from US private equity group Platinum Equity. Platinum has until 5pm on 26 February to declare its intention to make an offer or announce its withdrawal, in accordance with the takeover code.
TDR Capital is also currently in the process of buying the British supermarket chain Asda with Lancashire-based Issa brothers. The deal for the grocery chain is worth £6.8bn.
WATCH: TradeZero Stands Up to Clearing Houses and Wins
Aggreko, chaired by City veteran Ken Hanna, recently upgraded its full-year profit forecast and revealed its activity levels had recovered more strongly than anticipated.
It cited a “strong cash performance” in the second half, which saw group net debt cut by around £200m in the year.
Aggreko also has contracts to supply power to the Olympic Games in Tokyo this year, which is expected to go ahead in the summer after it was postponed last year due to the coronavirus pandemic.
Aggreko said last month the value of the Olympics contract would be $315m (£229m), and its executives said at the time that they were “confident of delivering”.
WATCH: Why can't governments just print more money?