Morgan Sindall has bought MJ Gleeson's building and civil engineering rail business for £23.3m.
The Gleeson MCL business is focused on building, refurbishing and maintaining stations, bridges and other rail assets. It will be absorbed within Morgan Est, Morgan Sindall's infrastructure services division.
Gleeson MCL's clients include London Underground, Network Rail, Tube Lines, Metronet, Dockland Light Railways as well as local authorities. In the year to 30 June 2005 it made a £2.1m pre-tax profit, with gross assets of £18.1m, including £6.1m net cash.
The business, which is run by Danny Duggan, employs 143 people and has its headquarters at Hatfield, Hertfordshire.
Gleeson said that the £18.1m it would make from the deal would be used to reduce debt.
Morgan Sindall chief executive Paul Smith said: "This acquisition strengthens Morgan Est's presence in the rail sector where we believe there will be sustained growth opportunities."
Gleeson due to announce its interim results for the six months to 31 December 2005 this Friday, when it is also expected to reveal the details of a strategic review. Last year it sold its loss-making building division to a management team led by Martin Smout.
Gleeson's biggest business is now its homes and regeneration division. This is thought to be of interest to buyers such as Heron International, Gladedale and the Miller Group.