Support services giant Carillion is paying £306m for Eaga, one of the UK's biggest suppliers of heating and renewable energy services.
Eaga, which has about 4,000 staff, works with the government and local councils on low carbon energy projects.
Carillion said that it had identified the low carbon market as a strategic area of growth.
Eaga's board has recommended to shareholders that they approve the 120p-a-share cash offer from Carillion.
The deal comes two weeks after Eaga's financial results saw it post a £5m loss for the half-year.
Eaga has been hit by public spending cuts, particularly the phasing out of the Warm Front scheme to install insulation and new heating in poorer households.
Carillion has more than 47,000 staff in the UK and overseas, and generates annual sales of over £5bn. Its portfolio includes schools and roads projects, as well as projects in the defence industry.