Mowlem has been bought by historic rival, Wolverhampton-based Carillion, for £291 million, in a deal which will create one of the UK's biggest construction companies, with an annual turnover of £4.1 billion.
Mowlem has been beset with problems in recent years, including involvement with the heavily troubled Spinnaker Tower in Portsmouth and Grimshaw's disastrous Bath Spa scheme. Carillion will pay 205p a share for Mowlem.
Carillion said the deal would boost the number of contracts it has with the British government and create one of the biggest support services operators in the UK. The firm claims it has identified overhead savings in areas such as head offices, regional offices, management and back-office services and also expects to save cash through improving its supply chain.
Mowlem issued four profit warnings in 2005 and fell £73.4 million into the red after its new chief executive Simon Vivian, who started at the company in January, replacing John Gains, carried out a financial review of 1,000 of its ongoing projects.
He also restructured its construction services operation, which resulted in around 300 job losses, and split it into three divisions: Mowlem Building, Mowlem Infrastructure and Mowlem Engineering.
Vivian implemented a common accounting policy across the business, which resulted in the departure of Mowlem's finance director Gerry Brown, who was replaced by Paul Mainwaring in May.
The acquisition will boost Carillion's existing portfolio of Public-Private Partnership projects, where Mowlem has a big presence.
Carillion chairman Philip Rogerson said: 'There is an excellent strategic fit between the two companies and the combined group will be one of the UK's most significant support services and construction companies.'
Carillion's business is made up of construction, engineering and support services operations and was formed after its demerger from Tarmac in 1999.