Funeral firm Dignity, which operates crematoria in the West Midlands, swept up in £281m takeover deal

A bidding consortium consisting of SPWOne V and Castelnau Group, whose investment manager is Phoenix Asset Management Partners, made a final offer of 550p per each share, which Sutton Coldfield-based Dignity said it had accepted.

The deal values the group at £789m when taking into account both its market cap and the cost to pay off its debts.

Gary Channon, former chief executive officer of Dignity, is working as chief investment officer for the consortium's investment manager Phoenix, which Dignity said will allow investors to benefit from his former leadership.

Dignity was created in 1994 and was first listed on the Stock Exchange 10 years later.

It currently has 795 funeral locations and funeral directors in the group _ the oldest dating from 1812 – including Jennings in the Black Country, Newport and District Funeral Directors in Newport, Shropshire, and funeral directors in Staffordshire and Worcestershire.

Its 46 crematoria include Birmingham at Perry Barr, Lichfield, Shrewsbury's Emstrey, Telford and Wyre Forest at Stourport-on-Severn. The group also operates 24 cemeteries.

The group said that the deal will give shareholders the opportunity to receive a cash premium for investing in Dignity at a time that it is facing "a number of uncertainties", and that the firm will benefit from becoming private.

Increased competition in the funerals market, introducing cheaper funeral options like direct cremations, and a more cash-conscious consumer have all impacted the business's performance over the past year.

Sir Peter Wood, chair of SPWOne, said: "Dignity has long-term growth potential _ the signs are clear to me.

"However, given the challenges and significant development work needed, the best way forward for Dignity is as a private company, benefiting from our unique combination of experience and customer-orientated expertise.

"We are offering a very fair price in cash, or shareholders can stay on the journey with us as we look to implement our strategy to create significant value over the medium term."

Dignity also revealed on Monday that it expects its underlying operating profits to have more than halved last year compared to the previous year, hitting a maximum of £20m, down from £55.8m in 2021.

Underlying revenues are expected to be no more than £275m, a drop from £312m the prior year.

And the group's net debt position is set to have increased to £508m at the end of 2022.

Dignity said it is putting a new strategy in place which is beginning to show early signs of increasing its share of the market, and address its operational challenges.

"However, as previously reported, performance continues to be impacted by changes in pricing strategy and the continued shift towards lowered-priced products, despite higher-than-average death rate persisting post-Covid", the firm said.

Shares in Dignity jumped by nearly eight per cent on Monday morning.