French tyre maker Michelin has struck a deal to acquire British manufacturer Fenner in a £1.2 billion deal.

The groups announced the deal after market close on Monday, with Michelin to shell out 610p per Fenner share, a 31% premium to the FTSE 250 firm’s closing price on March 16.

Fenner, based in Hessle in East Yorkshire, manufactures conveyor belts and reinforced polymer products for mining and industrial markets.

It raked in £655 million in revenue last year and Michelin said the deal could unlock £30 million in annual cost savings through processing efficiencies and leveraging R&D skills.

Michelin boss Jean-Dominique Senard said: “Mastering high-technology materials is key to creating value in the coming years.

“The acquisition will enable Michelin to accelerate its growth in this area, and to strengthen its position as a key player in the recovering mining markets with a comprehensive offering.”

Fenner’s directors said they believe the offer to be fair and reasonable and unanimously recommend shareholders accept the deal.

The company’s chairman Vanda Murray said:  “Fenner has successfully established itself as a world leader in reinforced polymer technology and the board remains confident that Fenner’s existing strategy would deliver significant value for Fenner shareholders as an independent company.

“However, we also believe that the terms of the acquisition acknowledge the quality of Fenner’s businesses and the strength of its future prospects, and as such the board intends to recommend unanimously the acquisition to Fenner shareholders.”

Fenner chief executive Mark Abrahams described Michelin as an excellent “cultural fit”.