Baxi, the UK’s leading boilermaker, has agreed a €1.7bn (£1.4bn) merger with De Dietrich Remeha Group, its smaller Dutch rival, taking the Derby-based company’s private equity owner BC Partners closer to needing to raise a new fund.

The merger, which needs approval from Baxi’s creditors, would help the UK group repay £445m of debt maturing between now and 2014. About £45m of Baxi debt matures this year and if the merger is blocked it would be unable to repay it.