Carillion says the combined £4.7bn business will make £30m cost savings by end of next year

Carillion has agreed a £572m deal to take over Alfred McAlpine in a move which will create a £4.7bn turnover company – the UK’s largest contracting business.

The companies announced they have reached agreement on a 558p a share deal, 27p per share lower than initial price of 585p provisionally agreed in October.

The drop is understood to reflect continued uncertainty in the financial markets, which has wiped around £10bn off the share price of housebuilders and contractors in the UK.

Carillion said today that it expects around £30m of synergy savings from the takeover by the end of next year.

The company said that it would target “higher margin projects” after the takeover. It said that the deal would also enhance Carillion’s capacity for growth in the Middle East.

Philip Rogerson, Carillion chairman, said: “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”.

Roger Urwin, chairman of Alfred McAlpine said: “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.”