Wates Group has reached an agreement on a buyout deal for a number of Shepherd Group’s subsidiaries as well as a large number of contracts and strategic frameworks.

The sale will see Wates take control of Shepherd Engineering Services (SES), Shepherd Facilities Management and a significant number of contracts from Shepherd Construction Limited.

The terms of the proposed deal have not been disclosed but about 1,200 staff are expected to transfer over in September.

Confirmation of the buyout comes after Shepherd revealed 55 job cuts across its construction division.

Its latest accounts showed Shepherd Construction ran up an £8.2m loss last year, as turnover fell by a third to £240m. Shepherd Engineering Services business performed better, making a £5.3m profit as turnover rose eight per cent to £208m.

Andrew Davies, the chief executive of Wates Group, said: “We have exchanged contracts with Shepherd Group to acquire parts of their built environment business.

“Work continues to complete the transaction and to then transfer and successfully integrate these businesses into the Wates Group.

“The acquisitions make our business stronger and come at a time when we have a very strong order book.

“I am delighted that we have completed this milestone and look forward to working with new colleagues to build an even better business.”

David Williams, the chairman of Shepherd Group, added: “Having exchanged contracts with Wates Group we will now continue to work together to bring this transaction to a successful conclusion.

“This is an exciting time, both for the businesses and people transferring to Wates and for those remaining with Shepherd Group.

“We look forward to continuing to pursue our strategy of focusing future investment on the areas of the Group with significant sustainable development opportunities.

“In particular, the sale will enable us to further develop the UK and European expansion of our successful Portakabin business.”