Mumbai: The Mumbai-based construction and infrastructure major Hindustan Construction Company today said that it is acquiring a 66-per cent controlling stake in Switzerland's second largest real estate total services contractor, Karl Steiner AG (KSAG) in an all-cash deal valued at 35 million Swiss Francs (CHF), subject to regulatory clearances in Switzerland and India.

HCC said KSAG will issue new shares to HCC and will use the funds raised by the capital increase for its Swiss operations, and the growth of its core business in India construction market.

''This acquisition has been carried out on grounds of strategic fit both to capture local market opportunity and to provide us with a presence for European expansion," said  Ajit Gulabchand, chairman and managing director, HCC.

Under the terms of the agreement that support a smooth transition, KSAG's chairman and sole owner Peter Steiner will stay on as vice chairman and minority shareholder till 2014, when he will divest his remaining stake to HCC.

HCC expects to close the deal in the second quarter of 2010. Upon closing of the transaction, KG Tendulkar, Chief Operating Officer for HCC's group of companies, will lead KSAG and join the company's board.

Tendulkar and KSAG CEO Henri Muhr will manage the integration process.

Gulabchand said, "KSAG's rich history and expertise in total services contracting will allow HCC to undertake the development and construction of world class residential and commercial spaces on a turnkey basis in India. This is one of the fastest growing segments in India, and we look forward to addressing the Indian customer's needs for top class, green and well integrated spaces for living, work and leisure.

"This strategic fit will also open the Swiss and European market to HCC's E&C business and will help procure greater access to technology and EPC capability. We welcome KSAG into the HCC family and look forward to an immediate value addition in each one of our business lines.''

The acquisition would enable HCC an entry into lucrative integrated building construction market in India, the size of which it estimates at betwen Rs65,000 and Rs75,000 crore annually and a footprint in KSAG's European operations.

HCC will also be acquiring new skills in total services contracting backed by KSAG's technologies to augment its strengths in the engineering, procurement and construction (EPC) contracts segment.

Peter Steiner said, ''I am very pleased that, in view of my succession and after the sale of our French subsidiary last November, we have now also found an excellent solution for our primary business. HCC's commitment allows us, as envisaged, to continue our activities and projects, and it is in the best interest of our clients, employees and business partners. HCC is an impressive, very well-managed company that has secured a leading market position in booming India.''