Banner Homes, founded in 1975 and which has its group headquarters near High Wycombe in Buckinghamshire, built 235 units in its most recent financial year, at an average price of £511,000.
In the 12 months to May 31, 2013, the company recorded a turnover of more than £111m and pre-tax profit of £8.5m.
At the moment, Banner operates from 21 sites, holds a land bank of 1100 units, and employs around 200 direct staff.
Alan Brown, Cala chief executive, said talks about the deal had started last summer and he was delighted to get the transaction over the finishing line.
He said: "They were looking to find a new financial partner as they also had growth plans.
"Their market position, geography and culture just fit so well with what we are doing that it made sense for us to do something together.
"We are very excited about it. It is a perfect fit for Cala on every level."
While neither side was willing to disclose the exact value of the deal it is being funded by additional equity from Cala's existing backers Patron Capital, Legal & General and Electra as well as a new extended debt facility provided by Bank of Scotland and Santander.
Mark Prentice, from Bank of Scotland, said: "We are proud to continue our support of Cala Group, by leading this syndicated facility to enable its expansion into new markets."
Four senior executives from Banner - production director Marc Coulon, finance director Richard Walbourn, sales and marketing director Piers Banfield and land director John Kennedy - have also taken a stake in Cala but the English company's chief executive Richard Werth has decided to leave.
Mr Werth was one of the largest individual shareholders in Banner Homes Group, according to its most recent annual return. That showed he had around 37% of the ordinary shares although the company's share capital is split up into ordinary, A, B and C categories.
Mr Brown said: "One of the reasons for doing the acquisition was not just the fact they had the sites in the right place but also they had a very well respected management team and one we are very keen to work with."
Property industry sources suggested the valuation of the deal would be in the region of £200m.
The acquisition will lead to the eventual withdrawal of the Banner name from the market.
Mr Brown said: "There is going to be no change in terms of market positioning.
"The Banner brand and Cala brand have equal value in and around England as they have both got very good names for producing quality detached housing.
"It makes sense for us to go with one name and given the strength of Cala's brand in Scotland it made sense for us to keep that throughout the whole of the group."
According to Mr Brown the addition of the Banner land bank give Cala around six years' worth of a development pipeline even with its ambitious growth plans.
However he suggested the growth will now mainly be organic and said: "We never say never [on acquisitions] but our plan is not to do any more.
"We don't see many, if any, other house builders out there that would fit as well as Banner do.
"We have fairly aggressive growth plans of our own which we are well on target to achieve. Banner just accelerates those."
The combined Cala and Banner business will have around 600 people and is predicting a turnover of £500m in its first full year of trading.
By 2017 turnover in excess of £800m has been targeted with the business have the ability to build up to 2000 homes.
Mr Brown said the company was still planning to hire further staff in the coming months to meet its growth targets while the greater scale will also allow it to target greater efficiency in its supply chain.
He also believes the in-house design capabilities at Banner can be rolled out across the wider Cala group.
Cala recently announced plans to spin-off its north of Scotland division as a separate trading entity to take advantage of the booming economy in and around Aberdeen.
The business will still have its east and west Scotland divisions. Cala is targeting 70% turnover growth in the west over the next three years and a doubling from its east operations.