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UK funeral service provider Dignity agrees to $349 million takeover

(Reuters) - Funeral services provider Dignity Plc has agreed to a sweetened 281 million pound ($349 million) takeover by a consortium backed by investment firms SPWOne V Ltd, Castelnau Group and Phoenix Asset Management Partners.

Dignity, which had disclosed talks on a buyout proposal earlier this month, said the consortium's revised cash offer of 550 pence per share - increased from 525 pence a share - represented a premium of 29.3% to the closing price of the company's shares on Jan. 3.

Dignity's shares climbed more than 8% to a more than nine-month high of 547 pence by 0918 GMT on Monday.

The stock, which fell about 30% in 2022, has rebounded after disclosing the buyout talks.

The consortium, which already owned or controlled about 29% of Dignity, said in a joint statement that the deal would help the company to get significant investment under a private ownership and also provide the financial muscle to look at acquisitions.

Dignity, which owns 725 funeral locations and 46 crematoria in Britain, has faced pricing pressures and regulatory requirements from Britain's competition watchdog.

The company forecast in a separate statement on Monday that 2022 underlying operating profit would fall more than 64% year on year, hit by a continued shift towards lowered-priced products.

The takeover deal includes the option for Dignity shareholders to stay invested in the company through an unlisted share alternative in Valderrama, an indirect parent company of bidding company Yellow (SPC) Bidco Ltd, or a listed share alternative in Castelnau.

SPWone is owned by veteran entrepreneur Peter Wood, who has also founded seven companies across UK, Europe and the United States including the London-listed insurance firm Direct Line.

($1 = 0.8052 pounds)

(Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Rashmi Aich and Jane Merriman)