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Last Updated: Wednesday, 7 December 2005, 08:59 GMT
Construction firms agree takeover
Carillion helps maintain Britain's roads
Construction and engineering firm Carillion has agreed to buy its smaller rival Mowlem for about 290m ($503.1m).

Carillion said the deal would create one of the UK's largest support services and construction firms with a combined turnover of more than 4.1bn.

The deal is expected to boost Carillion's presence in Private Finance Initiative (PFI) projects.

Carillion was behind the rebuilding of the GCHQ intelligence centre in Cheltenham back in 2000.

The company was spun out of the Tarmac demerger in 1999, and has been selling off its traditional contracting businesses to focus on PFI projects.

'Good deal'

The combined group will be one of the UK's most significant support services and construction companies
Philip Rogerson, Carillion chairman

Mowlem is also involved in a number of PFI contracts and was also behind the landmark Spinnaker Tower project at Gunwharf Quays in Portsmouth.

It has recently embarked on a business shake-up which has included the restructuring of its construction services operations, splitting the division into three units - Mowlem Building, Mowlem Infrastructure and Mowlem Engineering.

Carillion described the deal as an "excellent strategic fit between the two companies".

"The combined group will be one of the UK's most significant support services and construction companies," said Philip Rogerson, chairman of Carillion.

"This is a good deal for Mowlem shareholders," said Joe Darby, chairman of Mowlem.

The tie-up is expected to result in cost-savings of 15m by the end of 2007. Areas such as head and regional offices, as well as management and back office services will be trimmed back.

Carillion said it was "inevitable" that some jobs would be lost following the takeover.

"Clearly, there will be redundancies and it could well run into hundreds of jobs," said Carillion's chief executive John McDonough.

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