About 2,500 jobs at the troubled firm Connaught have been saved after Morgan Sindall stepped in and paid Â£28 million for the bulk of the business.
Morgan Sindall's share price has ended up nearly 10% higher over the last two weeks as its business rival fell apart.
Connaught, an Exeter based social housing group now in administration with KPMG, has made 95 headquarters staff redundant but also has another 1,900 staff whose futures remain uncertain. The position of contract workers also remains unclear.
The 2,500 fortunate members of the workforce will be transferred from Connaught to Morgan Sindall's own affordable housing unit, Lovell Partnerships.
There are allegations that Connaught found itself in an untenable position after bidding so aggressively for local authority and housing association work that it left no room for profit.
Morgan Sindall has gone in relatively early on the deal and has managed to get ongoing contracts and assets at a discount on their net book value. They have also been able to cherry pick and expect to make Â£200 million of additional revenue from the contracts, but KPMG are still in talks with other companies about the sale of the remaining assets.
When it got into trouble Connaught put its parent company and its social housing operation into administration but Connaught Environmental (ground maintenance) and Connaught Compliance (health and safety advice) are still trading.
Morgan Sindall have pointed out in their acquisition statement that the money for the purchase comes from existing cash resources and is in line with their long term strategic goals. And that as of 30th June 2010 they had net cash of Â£138 million so they "have a strong financial position following the acquisition".
The Executive Chairman of the Morgan Sidall Group plc, John Morgan, said "This is a step change for Lovell. The acquisition significantly increases the scope and scale of our planned and reactive maintenance activities and further develops our market leading position".