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(Reuters) - French construction equipment maker Altrad Investment Authority said on Friday it agreed to buy UK oil services company Cape Plc for about 332.2 million pounds ($430.3 million) in cash.
Cape's stock rose as much as 47.8 percent to its highest since May 2015.
Altrad's offer for 265 pence per Cape share represents a premium of 46.2 percent to the stock's closing price of 181.25 pence on Thursday.
The merger would create a "multidisciplinary" industrial services company operating in a wider range of markets, Altrad said in a statement.
Altrad, which provides scaffolding and light construction services, said it would fund the deal via a loan from BNP Paribas SA and that Cape's directors considered the offer "fair and reasonable".
Shares in Cape pared some of their early gains to trade up about 45.5 percent at 263.75 pence by 0714 GMT on the London Stock Exchange.
As of its last close, Cape stock had fallen 46.6 percent from 335 pence, its 2014 peak just before oil prices collapsed.
Reporting by Sanjeeban Sarkar in Bengaluru; Editing by Amrutha Gayathri