May Gurney bosses today insisted that the firm will stay true to its Norfolk roots as it begins a new era following a multi-million pound merger deal.

Questions surrounded the future of the firm's 800 Norfolk staff and its base at Trowse on the edge of Norwich, after news of the deal to merge with Kent-based Costain was announced.

May Gurney was launched from a wooden shed in Trowse in 1912 – a partnership between R J May and Christopher Gurney – and has grown into a £695m-a-year intregrated services company posting profits last year of £19.3m with assets of £333m. It works with councils on highways and waste collection as well as utility firms such as Anglian Water and Network Rails.

Bosses said the tie-up – which still needs to be agreed by shareholders – would propel the new venture into the 'premier league' of engineering and service companies giving it the clout to compete with bigger rivals.

However, under the plans the firm's HQ will move to Maidenhead – but bosses insisted that the company remained committed to its Trowse operation.

The deal will see 150 jobs cut from a combined workforce of 11,000 as the group looks to save £10m a year from the all-share deal, but it is not clear yet how many of the Norfolk staff will be affected.

Costain chief executive Andrew Wyllie said: 'We have taken full account of both the strategic and operational importance of the depot in Norwich. We haven't been specific about many things but we have been specific about Norwich because of its strategic importance to customers in East Anglia.'

He said the merger was driven by market demands for bigger companies able to offer a broader range of services and was not a reaction to the turbulent economic conditions. Talks started last September following an approach by Costain and under the terms of the deal, which must now be approved by both sets of shareholders, Costain will take 53pc of the enlarged company, with May Gurney investors taking 47pc.

'This is absolutely not about the economic environment,' Mr Wyllie added. 'We are moving into the Premier League of Tier 1 engineering and service providers.

'We see the combination of the heritage of both organisations being a very strong contribution to address that rapidly changing market dynamic. It's a new entity bringing together two strong companies with great track records. By putting two organisations together we see enormous opportunities for growth.

'We see this coming together of two established UK companies as good news for all our stakeholders,' he added. 'Our customers are increasingly demanding a broader range of integrated services and this powerful combination will enhance our status as a tier one engineering solutions provider.'

Willie MacDiarmid, May Gurney interim chief executive, who is to remain on the board as a non-executive director, said: 'We are pulling together two companies with complimentary skill sets.

'We have got 800 staff in Norfolk and 260 suppliers,' he said. 'It was very early on in the discussions that the importance of our Norwich operation was fully understood,' he added. 'The feedback has been positive.'

The companies will have combined revenues of £1.6bn and challenge rivals including Balfour Beatty and Carillion.

Nevertheless, Costain's directors will take the top jobs in the enlarged company, with its chief executive finance director and chairman keeping their respective positions.