Acquisition of housebuilder

Kier Group PLC
01 August 2006
                                                                   1 August 2006

                     ACQUISITION OF HOUSEBUILDER FOR £53.3m

Kier Group plc, the major construction, support services, homes and property
group announces that it has acquired Hugh Bourn Developments (Wragby) Limited
(the 'Company'), a regional housebuilder operating in north Lincolnshire.

Kier Homes Northern Limited (a wholly owned subsidiary of Kier Residential) has
acquired the entire issued share capital of the Company from the Bourn family
for £53.3m representing the market value of land, work in progress and other
assets and liabilities. The consideration will be funded from Kier's cash
balances and banking facilities with £20m paid on completion and the balance due
in equal instalments on 2 July 2007 and 1 July 2008.

The Company is a well established regional housebuilder having operated in
Lincolnshire for over 30 years and will form the foundation for a fifth division
of Kier Group's residential business, expanding its reach to the north of
Allison Homes' existing operations.  The majority of the 1,197 residential plots
acquired with the business benefit from a combination of outline and detailed
planning consent and include a small number of built and partially built units.
In its first year the Company is expected to trade from 21 trading outlets and
is expected to be earnings enhancing to the Group.

Commenting on the transaction, John Dodds, Chief Executive said:

"This acquisition provides us with an excellent opportunity to further expand
our housing division by providing the basis for a new region to complement our
four existing, successful, regional housebuilding businesses.  Buying land off
market in this way has proved very successful in past acquisitions and I
anticipate that this transaction will provide a return on our investment in the
first year."

Kier Group will be announcing its full year results to 30 June 2006 on 14
September 2006.


                                    - ENDS -


For further information, please contact:

John Dodds, Chief Executive
Kier Group plc                           Tel: [phone]

Deena Mattar, Finance Director
Kier Group plc                           Tel: [phone]

Caroline Sturdy
Madano Partnership                       Tel: [phone]



Notes on Hugh Bourn Developments (Wragby) Limited:

Hugh Bourn Developments (Wragby) Limited ('the Company') disclosed a profit
before taxation for the year ended 31 March 2006 of £4.2m based on the historic
book value of land.

At 31 March 2006 the gross assets of the Company were £29.9m.  The largest asset
category by class is the land bank which is accounted for at the lower of cost
and net realisable value.  Kier Group intends to consolidate the net assets of
the Company at fair value which the Board expects to approximate to the purchase
consideration.

Kier Group will therefore report operating margins, in respect of the Company,
based on the fair value of land.


                      This information is provided by RNS
            The company news service from the London Stock Exchange