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NEW YORK (TheStreet) -- Mac-Gray TUC was surging Tuesday as the laundry facilities management contractor agreed to be acquired by rival CSC ServiceWorks  in a cash-and-debt deal valued at about $524 million.

Terms of the deal call for Plainview, N.Y.-based CSC, a commercial laundry and coin service operator formed earlier this year, to pay $21.25 per share in cash for Mac-Gray, a premium of 42% over Monday closing price. The deal values Mac-Gray's equity at about $312 million, with CSC also agreeing to take on debt.

Mac-Gray was gaining 41% to $21 in mid-morning trading.

Pamplona Capital Management LLP created CSC earlier this year when it acquired Coinmach Services Corp. and AIR-serv Group LLC for a combined $1.4 billion. Coinmach owns and operates the money collection machines used in coin-operated laundry services, while AIR-serv provides similar services for tire inflation machines and car washes.

Waltham, Mass.-based Mac-Gray, in business since 1927, is a provider of laundry facilities management services to apartments and college dorms. The company generated sales of $322.1 million in 2012, and currently operates in 44 states and the District of Columbia.

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"Both CSC and Mac-Gray are industry leaders in customer service and technology," CSC chief executive Bob Doyle said. "On behalf of CSC and our controlling shareholder, Pamplona Capital Management, we look forward to welcoming the Mac-Gray employees to our team."

Mac-Gray last year was under pressure from activists including Moab Capital Partners LLC, which pushed for two seats on the board after the company in 2011 rejected a $17.50 per share offer from KP Capital LLC.

Thomas E. Bullock, Mac-Gray's chairman, said in a statement that the company's board "has determined that the all-cash transaction with CSC maximizes value for our shareholders."

Mac-Gray was advised by a BofA Merrill Lynch team of Kevin Brunner, Kevin Knupp, Dustin Bertram, Ed Fitzgerald, Chanan Glambosky and Kevin Atieh along with attorneys from Goodwin Procter LLP. Morgan Stanley & Co. LLC, Deutsche Bank Securities Inc. and Evercore Group LLC served as financial advisers to CSC, with Kirkland & Ellis LLP providing legal counsel.

--By Lou Whiteman in Atlanta