CREST Nicholson has rejected an attempt by Montpellier to buy its Bristol-based contracting division, CH Pearce.
Paul Sellars, Montpellier's managing director, explained: 'We got to the final stages and did some due diligence.
'We went back with a second stage offer and they turned us down. Crest simply wrote to us and said we were unsuccessful.
'It's very disappointing as that was an area we would have liked to be in.'
Crest, which declined to comment, has been preparing £225 million-turnover Pearce for a sale for some time.
Pearce is doing less work for Crest's house building operation and its construction management arm was transferred to the parent group earlier this year.
Despite the setback, Montpellier is still looking for acquisitions. Mr Sellars added: 'We get offered companies all the time but often they are too small and just not very good.'
Orders at Montpellier's construction division, YJL, have rocketed to £398 million from £231 million a year ago.
Construction is responsible for the majority of the profits at Montpellier, which also has investment and property divisions.
The firm does not break out figures for each division at the half-year stage after shifting to the junior Alternative Investment Market last year But group pre-tax profits in the six months to March 2002 rose to £2.7 million from £1.5 million on turnover of £217.5 million, up from £116.7 million.