The acquisition will give Vinci PLC, a collection of subsidiary firms including contractor Norwest Holst that make up the UK division of Vinci, a projected annual turnover of £1.4bn.
This would make it the UK's third largest civils contractor based on figures in NCE's Contractors File 2008, but Vinci said it no plans to merge Norwest Holst and Taylor Woodrow, and each would retain its own identity.
Vinci PLC chairman and chief executive John Stanion said he hoped the audition would improve his firm's standing in the UK rail and energy markets.
"The acquisition of Taylor Woodrow (the construction business) is a significant step in our strategy of developing our presence in the rail and energy infrastructure and FM markets in the UK and expands our regional building activities in health, education, retail and airports as well as increasing our portfolio of PFI and PPP activities," he said.
"The name Taylor Woodrow is synonymous with client focused innovation and project and programme management of the highest order. We are delighted to combine our two businesses into what we intend to become one of the most proficient construction groups in the UK."
Taylor Woodrow employs around 1,700 people and had a turnover in 2007 of £600M with an operating profit of £17.8M. Current projects include the capacity upgrade of London's Docklands Light Railway and construction of the Frank Gehry-designed Serpentine Gallery Pavilion in Hyde Park.
Taylor Woodrow managing director Tim Peach said: "The combination of our two businesses will create a company with complementary areas of operation and expertise, thereby providing added value for our customers and greater opportunity for our teams."