Bus maker Alexander Dennis has become the UK's biggest bus and coach manufacturer after announcing yesterday it had acquired Plaxton Holdings.

The deal, for an undisclosed sum, will create a £250m business employing around 1900 people at Alexander Dennis's plants in Falkirk and Guildford, Surrey, and at Plaxton's Scarborough and Anston facilities in Yorkshire.

It comes one month after Colin Robertson took over the reins as chief executive at Alexander Dennis, declaring then that he would be disappointed if the company did not "double its present size, at a minimum, within five years".

Last month, the group results to September 30, 2006, showed 14% growth in turnover to more than £170m, along with an 84% increase in operating profit to £12.9m.

Alexander Dennis is currently UK market leader with around 40% of all new bus registrations, and an advance order book in excess of £100m.

Robertson said the deal has created a platform for entry into new European and other markets.

He said: "To stay at the forefront in the UK, while also creating a platform for growth internationally, requires a business with scale, purchasing power, unique skill sets and innovative products.

"It also needs shareholders who are prepared to invest in the future.

"This deal has all of these ingredients. Alexander Dennis is currently outright market leader in the British bus sector - and has a worldwide reputation for double deck bus products - while Plaxton is by far and away the UK's most outstanding coach builder.

"We will continue to invest significantly in new bus and coach products, while also forging alliances with international manufacturers including Volvo, MAN, Scania, Mercedes and VDL.

"I would expect to see such relationships grow and expand, both at home and abroad."

Alexander Dennis was bought out of administration in 2004 for £90m by a consortium of four of Scotland's leading business figures, Sir David Murray, the chairman of Rangers, merchant banker Angus Grossart, and Stagecoach's Brian Souter and his sister, Ann Gloag.

Plaxton's current business was acquired by a management team, backed by Aberdeen Asset Management, in the spring of 2004. Turnover since then has risen from around £45m per annum to more than £60m. The company currently builds the bodies of almost 30% of all new coaches registered in the UK.

Brian Davidson, chairman of Plaxton Holdings, said: "This is a positive step for both companies. It brings together like-minded people who know the British bus and coach business inside out. We are now aligned to a successful, financially sound business that is prepared to invest and to accelerate our forward plans."