An expanding medical equipment manufacturing company, which last year threatened to move out of Abingdon due to a shortage of space, is to relocate within the town.

Penlon employees Mick Tappin, left, and Richard Eccles at the company's Radley Road site

Penlon, which employs 270 people and has an annual turnover of more than £21m, is to sell its three-acre Radley Road site for housing to an unnamed developer and lease 40,000sq ft at the Abingdon Science Park.

The company, a winner of the Queen's Award for Enterprise, will keep 20,000sq ft of production facilities which it leases at Barton Mill, near Radley Road.

Chief executive Peter Tudor said he was delighted the company would be able to remain in the town, where most of the employees lived, rather than being forced to move to Witney as seemed probable last year.

In March 2002, the firm said it might have to leave Abingdon when it became clear it would not be able to move to industrial units that London developer Discovery Properties wanted to build on the flood plain off Marcham Road.

Mr Tudor said: "We were looking at Witney and Grove as it is quite easy to get development land, whereas it is very difficult around Abingdon. But it would have meant uprooting more than 200 people. Now we plan to move at the end of April."

In a separate development, Penlon has announced a second management buy-out -- worth £26m -- from its backers 3i, which backed the original buy-out of the company in 1996.

Kleinwort Capital has become the firm's main backer in a financial shake-up which has left the management team with a 35 per cent stake in the company, up from 18 per cent.

Mr Tudor said: "The company has doubled in size in the past five years and I see no reason why it should not continue in the same way, employing more people."

The firm, which exports to 90 countries, was founded in Oxford in 1943 as Longworth Scientific Instrument Co by the Department of Anaesthetics at Oxford University. In 1997 it bought Oxford company East Healthcare.