Costain has bought highways technology company Simulation Systems Limited for £17m.
SSL was established in 1979 and provides integrated hardware and software for traffic monitoring and management.
Its clients include Highways England, Transport for London, the Scottish and Welsh governments and several local authorities. Managing director Louis Thompson and other senior figures will stay with the business.
Costain chief executive Andrew Wyllie said: “We are delighted to announce the acquisition of SSL which is in line with our stated objective of accelerating the growth of business through a combination of organic and acquisitive growth.
“This transaction will further broaden our ability to deliver innovative technology-based solutions to meet the increasingly complex requirements of our major blue-chip customers in energy, water and transportation.”
SSL’s products include traffic control equipment, CCTV systems, controls for the management of traffic in tunnels, and pedestrian crossing signals.
Costain said last month that it would also expand its oil and gas decommissioning work.
In March it reported growth in pre-tax profit of 16 per cent in the year to 31 December 2015 – the fifth consecutive year of in which it posted a profit.