STEWART Milne Group is in negotiations to sell its construction division to Kier Group.

The Aberdeen company said it was approached by the national contractor although both parties told The Herald the deal is still in its early stages.

Accounts filed at Companies House show the building contracting division had a turnover of £57.2 million in the year to June 30, 2011, which was around a quarter of the group's £229m revenue.

The group employed 896 people during that period but it is not know how many have jobs within construction.

A statement from stock market listed Kier Group, which has its headquarters in Bedfordshire, said: "Kier Group can confirm that early discussions have taken place with the Stewart Milne Group concerning the possible acquisition of some of the activities of their construction division whose geographical spread, well-established reputation and customer base could provide a good fit with Kier's own construction business.

"However, at this stage there can be no certainty that a transaction will take place."

Stewart Milne's construction division has worked on Union Plaza in Aberdeen and the student centre for Abertay University in Dundee in recent years.

A statement from Stewart Milne Group said: "We are carefully considering this and will be undertaking a period of due diligence.

"This is due to begin in the next week and is targeted to be completed by the end of March. We cannot provide any further information.

"Should this go ahead it would allow the Stewart Milne Group to focus on expanding and developing its successful house building and timber frame operations across the UK."

Glasgow-based Dawn Group recently announced it was closing down its construction arm with the loss of around 60 jobs due to tough conditions in the sector.