COUNTY Durham group Hargreaves Services has bolstered its chemical transport division with the acquisition of a Teesside-based rival.

Hargreaves will pay £5m for Imperial Tankers, of Billingham, which specialises in the transport of liquid products.

The company will be merged with Hargreaves' bulk liquid transport division. A further £2m could be paid out for Imperial based on the performance of the merger after the first year.

Chief executive Gordon Banham said the deal made Hargreaves a top five business in the UK chemical tanker sector.

"Imperial is an excellent and well-run chemical tanker business, which is also a perfect fit with our own business," he said.

"The integration of the two businesses will start immediately and will result in significant synergies and savings.

"We view the growth potential of the combined chemical tanker operations as very encouraging".

Imperial was formed after a management buyout from ICI about ten years ago and it has made significant growth.

About 80 per cent of its volumes are contracted for periods of between one and five years.

Customers include Stockton-based Terra Nitrogen, UK Bitumen, Petroplus and Koppers, which all operate in Teesside.

During the past financial year, Imperial achieved a pre-tax profit of £1.35m on sales of £16.1m.

The announcement came two weeks after Hargreaves posted a 71 per cent increase in turnover to £265.3m and pledged to expand.

The transport, waste and industrial services group - which employs about 1,900 people including 250 staff at its headquarters in Esh Winning, near Durham - has made three important acquisitions during the past 12 months.

Last September, it bought industrial services provider Norec for £7.4m. In February, it acquired the assets of Maltby Colliery from UK Coal for £31m, and in April it purchased the business and assets of Simon Bulk Warehousing and Distribution for £4.2m.

Earlier this month, Mr Banham said: "The group board remains committed to a policy of substantial and continued growth within the areas of its expertise.

"I am confident of being able to report continued growth across all companies and divisions in the future."