Carillion, the UK's second-largest construction company, has agreed to buy rival Alfred McAlpine in a £572 million deal.
The agreement will create one of the country's largest support services and construction firms, with a combined revenue of around £4.7 billion.
In a statement today Carillion confirmed it was offering 558p per share for McAlpine, with the offer made up of 1.08 new Carillion shares and 165.4p in cash.
The company hopes to achieve an annual cost saving totalling £30 million by the end of 2009, when it also expects to deliver higher earnings if the merger goes ahead.
In addition to generating cost savings and improving operational performance, it is hoped the proposed tie-up between Carillion and McAlpine will enhance their respective positions across a range of UK growth markets.
Carillion said the planned deal would also boost the number of available managers with the necessary skills it needs to support major new growth opportunities in the Middle East.
Commenting on the proposed takeover, Carillion chairman Philip Rogerson said: "The acquisition of Alfred McAlpine represents a further step in Carillion's development and its successful strategy for sustainable and profitable growth.
"There is an excellent strategic fit between the two companies and the combined group will be one of the UK's leading support services businesses with enhanced capabilities in providing integrated solutions and construction services."
McAlpine chairman Roger Urwin added: "Over the past five years we have repositioned Alfred McAlpine into a valuable support services group, with leading positions in a number of growth markets.
"Carillion's offer recognises this value and gives our shareholders, employees and customers the opportunity to share in the future success of the enlarged group."
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