Morgan Sindall is to acquire the majority of Connaught's ongoing social housing contracts and their related assets, which are worth around £200m a year in revenue.
Around 2,500 employees connected with the ongoing contracts will transfer to the group's social housing division, Lovell Partnerships.
However, the deal still leaves around 6,500 Connaught staff with their fate in the hands of administrators KPMG, which is running three of the stricken firm's businesses.
Morgan Sindall has paid £28m in cash for the contract assets, which it said “represents a discount to their net book value”.
The group said the acquisition was consistent with its long-term strategy to achieve leading positions in its chosen markets.
The new contracts, which are expected to generate approximately £200m of additional annual revenue, are split between response maintenance contracts, Decent Homes improvements, and planned maintenance.
In the year to 31 December 2009, Lovell reported an operating profit of £14.9m on revenue of £374m. On 30 June 2010, it acquired Powerminster Gleeson Services to extend the division's response maintenance capability and geographic reach.
John Morgan, executive chairman of Morgan Sindall, 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.
"Our focus now will be to ensure a smooth handover of the contracts and to minimise disruption to essential maintenance services. We look forward to working with our new and existing clients and to provide them with a high level of service, as well as protecting jobs on the contracts we are acquiring.
"Through the experience built up at Lovell over many years, we are happy with the terms on which we are acquiring these contracts. The Board believes that this acquisition represents excellent value for our shareholders."