Acquisition

Kier Group PLC
12 September 2001

12 September 2001


                                    KIER GROUP plc

                       Acquisition of Allison Homes for £16.6m


Kier Group plc, the major construction, support services and homes group,
announces that it has acquired Allison Homes, a regional housebuilder
operating in the Eastern Counties of England in a transaction that
significantly increases the coverage of Kier's existing homes division.

A newly formed subsidiary, Kier Residential Eastern Counties Ltd, has acquired
the business trading as Allison Homes from Swallow Homes Limited, a private
company. The consideration, payable wholly in cash, is £16.6m, representing
the value of the net assets acquired, of which £12.8m has been paid on
completion, with the balance due in five instalments by April 2003. The total
price is subject to adjustment on the preparation of completion accounts. In
addition, Kier is assuming bank overdrafts of £9.3m and sundry loans totalling
£3.4m.


Kier expects the acquisition to enhance profits and earnings per share in the
current year: it is funding the acquisition from cash balances and banking
facilities. Its banking facilities are being enhanced by a further £15m of
revolving loans, committed for three years.

In the year to 30 June 2001 Swallow Homes Ltd, trading as Allison Homes,
reported profit before tax of £2.1m. Houses sold comprised 184 at an average
selling price of £120,100, making Allison Homes one of the two leading
housebuilders in its area of operation.

Allison Homes is based in Spalding, Lincolnshire and operates throughout
Lincolnshire and the East Midlands. It places high importance on the quality
of its product and on a long term land acquisition programme, enabling it to
build a strong market presence in the area.

Colin Busby, Chairman and Chief Executive of Kier Group, said:


        'The acquisition of Allison Homes adds a fourth strong regional brand
        to our homes division. This is exactly the right way for Kier to
        expand this extremely successful business. It also conforms to our
        strategy of seeking growth in parallel from homes, construction,
        support services and PFI investment, which we see as all complementary
        businesses'.



Reasons for the acquisition

Allison Homes' operational area is adjacent to Kier's existing subsidiary,
Twigden Homes, based in St Neots, Cambridgeshire. Its product, market
positioning and land bank all conform to the strategy pursued by Kier
Residential's other branded regional housebuilding companies, Bellwinch Homes
in the South East of England, Twigden Homes in the Northern home counties and
Kier Homes in Scotland's central belt.

Allison Homes has an excellent holding of development land, providing
opportunity both in the immediate future and in the longer term. This
comprises 949 current plots with planning permission together with strategic
land interests containing approximately 3,000 plots already allocated for
residential development in local plans and a further 3,000 plots awaiting
allocation.

The acquisition significantly increases the trading base of Kier Residential.

Kier Group will be announcing its Preliminary results for the year to 30 June
2001 tomorrow, Thursday 13 September.



For further information, please contact:



Caroline Sturdy

Bell Pottinger Financial Limited

Tel: [phone]