Shares in aggregates group Breedon jumped by more than 5% in early trading after the group revealed a transformational move to acquire rival Hope Construction Materials.
Investors welcomed the proposed £336 million deal which will make Breedon, which has its Scottish headquarters at Ethiebeaton in Angus, the UK’s largest independent building materials company.
Breedon said it had agreed definitive terms to acquire Hope on a cash and debt-free basis.
The move is subject to approval by the UK Competitions and Markets Authority but is expected to complete in the second quarter of next year.
Hope, which made sales of £285.6m in the year to June 30, has a national footprint consisting of more than 160 operational sites including a major cement works in Derbyshire, five quarries and 152 concrete plants.
The firm has a strong presence in Scotland’s Central Belt and also has smaller operations in the Borders and Highlands.
Breedon executive chairman Peter Tom said the combined business would have almost 60 quarries under its control and access to 750m tonnes of mineral reserves and resources.
“This acquisition is well-timed, with UK construction output forecast to expand by around 15% over the next four years and volumes of all our major products expected to grow strongly,” Mr Tom said.
“We are confident that we will be able to continue delivering significant value for our shareholders in the coming years, with an even stronger platform for growth.”
Hope chairman Amit Bhatia said the joined business would have greater growth prospects.
“Both companies are entrepreneurial and energetic and this transaction will combine the best of both teams and cultures,” Mr Bhatia said.
Details of the merger deal were revealed as Breedon updated the market on its trading performance for the first 10 months of the year.
The firm said it had traded strongly in the period and the outlook remained positive, with “further progress” expected in 2016.
Shares closed up 3.02p at 63.40 on Wednesday.