Baxi, the UK’s leading boilermaker, is close to agreeing a €1.7bn ($2.4bn) merger with De Dietrich Remeha Group, its smaller Dutch rival, which would allow the Derby-based group to address its mounting debt problem.

BC Partners and Electra Partners, the private equity owners of Baxi, would invest €100m in the merged group as part of the deal, leaving them with a stake of slightly less than half.