The deal will make Miller one of the top 10 builders in Britain and will expand the group's housing division outside its traditional Scottish heartlands into the North West, Yorkshire, the West Midlands and the South of England. Insiders suggest that Miller beat some stiff competition from larger rivals such as Persimmon, Westbury and Redrow. Fairclough hit the market at the start of the summer.

The transaction will lift Miller's group turnover to euro 1.6 billion ($2 billion) and increase turnover in the housing division to around euro 1 billion ($1.3 billion). The landbank will rise to 16,943 plots, equivalent to four years' supply. Miller played down concerns that it was buying the business at the wrong time in the market cycle. Keith Miller, the group chief executive, says that the macro-economic outlook for the British housing market remained very positive, with growing household formation, high homeownership aspirations, high levels of employment and comparatively low interest rates.

He adds that, as a private company, Miller could afford to take a long-term view. "The market is tough and challenging, but we're geared-up to deal with that," he says. "It may well prove exactly the right time to be buying." Miller says it will take between six and 12 months to fully integrate the two businesses, but in the medium-term the group expected to play a leading role in the consolidation of the homebuilding sector and would remain on the lookout for further acquisitions.

The move comes after a fresh round of takeovers in homebuilding. Crosby Homes was recently snapped up by Lend Lease, the Australian construction company, and takeover rumours swirl around George Wimpey, one of Britain's largest builders, since it revealed a fall in pre-tax profits.