George Wimpey, the UK housebuilder, plans to axe 450 jobs after buying Alfred McAlpine's housebuilding division for £461m.
The job cuts will affect both companies and will help Wimpey generate more than £18m a year in cost savings.
Peter Johnson, Wimpey's chief executive, said: "[The acquisition] moves our strategy forward at a much faster rate, plus it is earnings enhancing from day one."
The divestment, which was agreed at a £50m premium over the book value of McAlpine's housebuilding unit, leaves McAlpine focussed on construction work and support services.
Oliver Whitehead, McAlpine's chief executive, said: "The deal unlocks the value of our businesses, which hasn't been reflected in our share price." He plans to return £100m to shareholders within a year. McAlpine shares soared 20.5p to close at 431.5p, while Wimpey's rose 6.5p to 203p.
Wimpey said it would pay £150m in cash on completion of the deal, with the remaining £311m due to be paid in five instalments within 12 months of completion.
The deal will increase Wimpey's exposure in the more affluent South, which Mr Johnson hopes will help it to improve its average selling price and operating margins.
Wimpey, which regains its place as one of Britain's biggest housebuilders by stockmarket value alongside Persimmon and Berkeley Group at over £1bn, plans to reduce volumes and focus on building homes with higher average selling prices. McAlpine's average selling price in the first half was £140,000 compared with Wimpey's £118,000.
But analysts were sceptical that the deal would help Wimpey to boost its profit margins substantially, which at 10 per cent trail the industry average of 16 per cent.Reuse content