The deal, which is being recommended by Hyder’s board to shareholders, will see 730p paid for each share.

This represents 50p a share more than the Nippon Koei offer and is at a 56% premium to Hyder’s to pre-offer trading price.

Hyder’s main board announced that it is withdrawing its support for the Nippon Koei bid in favour of the improved offer on Thursday afternoon.

This morning Nippon Koei said it was considering its position and would make a further announcement in due course.

Arcadis said the enlarged group would achieve significant revenue and cost synergies including savings through the use of global design excellence centres.

Hyder currently employs 4,000 staff globally while Arcadis has 22,000.

The deal follows AECOM’s acquisition of rival URS for £2.3bn last month.

A steering committee, jointly led by Ivor Catto, CEO of Hyder, and Stephan Ritter, Arcadis executive board member will detail how best to combine the two businesses.

Neil McArthur, Chief Executive Officer of Arcadis said: “Hyder is a unique company with a long history of being involved in the leading edge of design and engineering.

“The geographic coverage and capabilities of the two businesses are highly complementary.

“In the UK, Germany, Middle East and Asia, Hyder’s design and engineering services fully complement Arcadis’ design, consultancy and project management services.

“While Hyder’s presence in Australia creates a platform to provide the full range of Arcadis capabilities.”