GoIndustry, the industrial machinery and equipment auctioneer, has agreed to buy DoveBid, a US-based rival, for about £17m in cash and shares.

The deal will give GoIndustry greater strength in North America, where DoveBid draws 70 per cent of its revenues, and give it greater access to multinational corporations.

DoveBid generates 50 per cent of its revenues from such companies - GoIndustry only 10 per cent.

GoIndustry this month disappointed the stock market with a trading update stating that profits for 2007 would be below expectations due to delays affecting three sales.

In 2006 DoveBid, which has offices in 19 countries and specialises in capital asset auctions and valuation services, had revenues of $32m (£16m) and made a pre-tax loss of $3m.

To pay for the cash portion of the acquisition, GoIndustry has conditionally raised £18.5m through the issue of 185m new shares. It will also take on DoveBid's $1.9m of subordinated debt.

GoIndustry expects the deal to create cost savings of £4m in 2008 and £5m in 2009 and to be earnings enhancing in 2008, excluding exceptional restructuring costs of £2m.

GoIndustry shares, which have lost a third of their value in the past year, fell ¾p to 11p.