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By Rhys Jones and Simon Meads

LONDON, July 3 (Reuters) - Debt-troubled UK heating products maker Baxi said on Friday it had agreed to merge with Dutch rival De Dietrich Remeha to boost its capital position and create one of Europe's biggest heating products companies.
Private equity-owned Baxi, which had debt of around 630 million pounds ($1 billion) at the end of 2008, revealed on June 12 that it was in merger talks with its smaller rival, and said the combined company would have a turnover of 1.8 billion euros and employ some 6,400 staff.
The merged group will be majority-owned by the Remeha Group and be led by De Dietrich Remeha Chief Executive Rob van Banning. It will be the third-biggest boiler maker in Europe, after German groups Vaillant and Robert Bosch, boasting products including Heatrae Sadia showers and Potterton boilers.
Baxi and De Dietrich Remeha first discussed a merger in 2005, holding sporadic talks until mid-2008 when the two companies started seriously discussing how the merger would work, Andrew Newington, managing partner of Baxi owner BC Partners, told Reuters in a telephone interview.
Electra Partners which, along with Candover, sold Baxi in 2006 for 660 million pounds ($1.08 billion), retains a small stake in the business.
All discussions between the parties revolved around De Dietrich Remeha taking a majority stake in the merged group or buying its larger rival Baxi, said Newington.
"In today's market, clearly, selling them the company was less feasible: if the financing markets had been open that's exactly what they would have liked," said Newington.
BC Partners hopes to hold its participation in the merged group for three or four years before selling to De Dietrich Remeha, said Newington, a plan it hopes will help the firm meet its target of 25 to 30 percent gross returns.

Baxi said the merger would be a share swap, with Baxi's owners investing around 100 million euros of new equity.
The merger depends on debt providers agreeing to roll over into the new structure, but will not see them write down the value of their loans. With their agreement and regulatory approval the new business could be up and running by mid-September, said Newington.
"Our lenders have been very supportive of what we are trying to do and will, I think, be delighted to hear news of the merger," said Newington.
Baxi last week secured a standstill and waiver agreement on its leveraged loans, which allowed it to avoid breaching cashflow and leverage covenants on its leveraged loans. Baxi's main lender is Royal Bank of Scotland.
Before the waiver agreement Baxi had also warned that if merger talks did not lead to an agreed transaction before June 27 it would not be able to make 22.3 million pounds ($36.60 million) of loan repayments that were also due on that day. The deal will help Baxi address its growing debt burden of which around 45 million pounds is due for repayment this year.
De Dietrich Remeha, wholly owned by Remeha Group employs 2,200 people and had a turnover of 615 million euros in 2008, the company said.
The enterprise value of the combined company would be between 1.7 billion euros and 2 billion euros, according to BC Partners.

($1=.6093 Pound)

(Editing by Greg Mahlich and Simon Jessop) Keywords: BAXI/ (rhys.jones@reuters.com; +44 207 542 4166; Reuters Messaging: rhysl.jones@thomsonreuters.com)

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By Rhys Jones

LONDON, July 3 (Reuters) - Debt-troubled UK heating products maker Baxi said on Friday it has agreed to merge with Dutch rival De Dietrich Remeha to boost its capital position and create one of Europe's biggest heating products companies.
Private equity-owned Baxi, which had debt of around 630 million pounds ($1 billion) at the end of 2008, revealed on June 12 that it was in merger talks with its smaller rival and said the combined company would have a turnover of 1.8 billion euros and employ some 6,400 staff.
The merged group will be majority owned by the Remeha Group and be the third biggest boiler maker in Europe, after German groups Vaillant and Robert Bosch.
De Dietrich Remeha, wholly owned by Remeha Group itself employs 2,200 people and had a turnover of 615 million euros in 2008, the company said.
Baxi, whose products include Heatrae Sadia showers and Potterton boilers, said the merger would be structured as a share swap in which Baxi's owners, BC Partners and Electra Partners, would invest around 100 million euros of additional equity in the new group as minority partners, with Remeha Group holding the majority.
The enterprise value of the combined company would be between 1.7 billion euros and 2 billion euros, according to BC Partners.
"Initial discussions with the works council and debt providers have been encouraging. The transaction is expected to close during the second half of 2009 provided the conditions to the agreement are satisfied," Baxi said in a statement.
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."
The deal will help Baxi to address its growing debt burden of which around 45 million pounds is due for repayment this year. However, the deal also needs to be approved by Baxi's main lender, Royal Bank of Scotland.
Baxi, which recently warned it was in danger of breaching cashflow and leverage covenants when they were next tested at the end of June, last week secured a standstill and waiver agreement on its leveraged loans, which allowed it to avoid breaching covenants and technical default.
Before the waiver agreement Baxi had also warned that if merger talks with De Dietrich Remeha did not lead to an agreed transaction before June 27 it would not be able to make 22.3 million pounds ($36.60 million) of loan repayments that were also due on that day.
BC Partners acquired Baxi from Electra and Candover for 660 million pounds in 2004, although Electra retained a small stake.

($1=.6093 pounds)

(Editing by Greg Mahlich) ($1=.7133 Euro) Keywords: BAXI/

(rhys.jones@reuters.com; +44 207 542 4166; Reuters Messaging: rhysl.jones@thomsonreuters.com)

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BRUSSELS, July 2 (Reuters) - The following are mergers under review by the European Commission and a brief guide to the EU merger process:
APPROVALS AND WITHDRAWALS:
None

NEW LISTINGS:
None

EXTENSIONS AND OTHER CHANGES:
-- German carrier Deutsche Lufthansa AG seeks to acquire counterpart Austrian Airlines (notified May 8/ deadline June 17/extended on June 11/new deadline July 1/in-depth probe opened on July 1/new deadline Nov. 6)

-- Britain's Barclays Bank Plc and Royal Bank of Scotland Group Plc acquire joint control of Hillary S.a.r.l, a Luxembourg provider of medical assistance services that indirectly controls Spain's USP Hospitales S.L.U, a provider of similar services (notified June 4/deadline July 9/changed from simplified to non-simplified on July 2)
FIRST-STAGE REVIEWS BY DEADLINE:

-- U.S. firm Safran USA, controlled by French aerospace company Safran SA, to acquire joint control of U.S. detection products company General Electric Homeland Protection, currently controlled by U.S. company General Electric (notified May 26/deadline July 1/simplified)

-- Luxembourg-based steelmaker ArcelorMittal to acquire sole control of Noble European Holdings BV, a Dutch subsidiary of U.S. tailor-welded blanks maker Noble International Ltd (notified June 2/deadline July 7)

-- UK oil and gas company BP and U.S. chemical products company Dupont to acquire joint control of U.S. company Biobutanol LLC, which develops and licenses technology related to the commercial production of biobutanol (notified June 3/deadline July 8)

-- German healthcare and pharmaceutical group Celesio AG , controlled by Franz Haniel & Cie GmbH, to take sole control of Pharmexx GmbH, which provides temporary employment services to pharmaceutical companies (notified June 3/deadline July 8/simplified)

-- British leisure travel company TUI Travel Holdings and Cypriot diversified asset holding company Oscrivia Ltd acquire joint control of leisure travel firms Voyage Kiev of Ukraine and VKO Moscow of Russia (notified June 4/deadline July 9/simplified)

-- French asset management company BNP Paribas Investment Partners SA, belonging to BNP Paribas, and peer Credit Agricole Asset Management Luxembourg SA (CAAM), belonging to Credit Agricole, acquire joint control of Luxembourg's Fund Channel, a logistic platform for distribution of UCITS products that was previously owned exclusively by CAAM (notified June 8/deadline July 13/simplified)

-- German energy supplier Energie Baden-Wuerttemberg AG (EnBW) and Turkish conglomerate Borusan Holding take joint control of electricity producer Borusan Enerji, currently controlled solely by Borusan Holding (notified June 10/deadline July 15/simplified)

-- German Bosch Thermotechnik GmbH, controlled by industrial conglomerate Robert Bosch GmbH, acquires Loos Deutschland GmbH, a family-owned supplier of commercial and industrial boiler systems (notified June 12/deadline July 17) -- Kazakh oil company Cooperatieve KazMunaiGaz PKI U.A., controlled by Kazakh national oil and gas company JSC National Company KazMunaiGaz; and Austria's Euraisian Energy Holdings GmbH, controlled by China's largest oil and gas producer, China National Petroleum Corp (CNPC), to take joint control of Kazakh oil and gas company JSC Mangistaumunaigaz (notified June 12/deadline July 17/simplified) -- Dutch electronics manufacturer Philips to acquire sole control of Italian espresso machine maker Saeco International Group S.p.A (notified June 12/deadline July 17/simplified)

-- British drugmaker GlaxoSmithKline PLC to acquire U.S. skincare company Stiefel Laboratories Inc (notified June 15/deadline July 20)
-- U.S. biomedical and pharmaceutical company Pfizer to acquire U.S. pharmaceutical and healthcare company Wyeth (notified May 29/deadline July 6/extended on June 30/new deadline July 20)

-- Spanish renewable energy and construction firm Acciona Energia Internacional S.A.U., belonging to conglomerate Acciona Group, and Japanese trading house Mitsubishi Corp acquire joint control of Amper Central Solar SA, a Portuguese wholesale supplier of electricity (notified June 18/deadline July 24/simplified)

-- Italian transport and logistics company BLG Automobile Logistics Italia, belonging to the German BLG Logistics Group; and Belgian car terminal operator International Car Operators (Benelux) NV, belonging to Japan's NYK Group, acquire joint control of Italian venture ICO BLG Automobile Logistics Italia, which operates a car terminal in the port of Gioia Tauro (notified June 19/deadline July 27/simplified)

-- Dutch private equity firm Fortis Private Equity, a subsidiary of Fortis Bank Nederland (Holding) NV, to acquire sole control of Kuiken NV, a Dutch holding group active in the distribution of heavy equipment (notified June 23/deadline July 28/simplified)

-- Italian mutual investment fund F2i Fondi Italiani per le Infrastrutture SGR SpA and Luxembourg private equity fund Finavias Sarl, indirectly owned by French insurer AXA Group , acquire joint control of the majority shareholding of Italian gas distributor Enel Rete Gas SpA (notified June 23/deadline July 29/simplified)
-- Italian automaker Fiat SpA to acquire U.S. counterpart Chrysler LLC (notified June 23/deadline July 29)

-- France's Veolia Eau, a subsidiary of utility group Veolia Environnement, takes sole control of three French water distribution companies currently controlled jointly by Veolia Eau and Lyonnaise des Eaux, a subsidiary of French energy giant GDF Suez unit Suez Environnement (notified June 23/deadline July 30)

-- Dutch holding company SHV Holdings NV, involved in energy, consumer goods and private equity, acquires control of Eriks NV, a Dutch holding company whose operations include the distribution of mechanical engineering components (notified June 25/deadline July 31/simplified)

DEADLINES:
The European Commission has 25 working days after a deal is filed for a first-stage review. It may extend that to 35 working days, to consider either a company's proposed remedies or an EU member state's request to handle the case.
Most mergers win approval but occasionally the Commission opens a detailed second-stage investigation for up to 90 additional working days, which it may extend to 105 working days.

SIMPLIFIED:

Under the simplified procedure, the Commission announces the clearance of uncontroversial first-stage mergers without giving any reason for its decision. Cases may be reclassified as non-simplified -- that is, ordinary first-stage reviews -- until they are approved. (Brussels Newsroom, Tel:+322-287-6830; Fax:+322-230-7710; brussels.newsroom@reuters.com)

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