Two large French builders, Vinci and Groupe GTM, have agreed to merge to create Europe’s largest construction firm, with a combined turnover of more than £10.3bn.

The two expect to save up to £125m by linking up their operations but insist that this will not mean job cuts for their 110 000 staff.

Operations in France will account for 63% of revenue, although Vinci’s operations also include Norwest Holst, which does most of its work in the UK. Vinci also owns civil engineering contractor Ringway and has a stake in the Second Severn Crossing.

These moves are all evidence that Europe’s contractors are set for another round of consolidation.

City Analyst

Groupe GTM and Vinci are the former construction arms of two French utilities groups – GTM was owned by Suez Lyonnaise des Eaux and Vinci was part of Vivendi.

Vinci, formerly a 51%-owned subsidiary of Vivendi, was sold last April to undisclosed investors as part of the parent company’s strategy of focusing on its telecommunications and media businesses.

The decision of Vinci and GTM to merge comes a week after Bouygues, until now the largest contractor in Europe, launched an all-share bid to buy out the minority shareholders in its roadbuilding arm Colas. Norwegian firm Aker Maritime has also bought a 26% share in engineering and construction rival Kvaerner.