Contractor spends £26m on Amec's regeneration and construction arms and will integrate the 2800-strong building division into its own business

Morgan Sindall today confirmed that it has agreed to buy Amec’s construction business and regeneration division for a total of £26m.

Morgan Sindall will integrate Amec’s loss-making construction business, which employs 2800 people, within its own construction business and the management team led by managing director John Moss will remain.

The regeneration business, Amec Developments, will operate as a standalone business but will be aligned with Morgan Sindall’s existing affordable housing business. It employs 65 people and the existing management team will remain.

Morgan Sindall was first tipped by Building in January as frontrunner to buy Amec’s construction and regeneration business.

Morgan Sindall chairman John Morgan today said: “This acquisition is a key strategic next step for Morgan Sindall. It substantially adds to our existing divisions and opens up significant growth opportunities in our construction and regeneration markets.”

He added that the deal would give Morgan Sindall access to key new clients including BAA and the MoD.

Morgan Sindall will pay £55m of goodwill for the two businesses, and Amec will pay Morgan Sindall £29 for liabilities. Therefore the total payment by Morgan Sindall will be £26m.

In terms of construction Morgan Sindall has agreed to buy 150 of Amec’s existing contracts as well as its future £800m pipeline of projects.

For the year ended 31 December 2006 the construction business made an operating loss of £27.4 million on turnover of £685.4 million. The operating loss included losses of £24.1m relating to unprofitable contracts which have been completed or excluded from the transaction.

In the same period the regernation business achieved an operating profit of £32.3 million on turnover of £72.2 million.