A timber firm in the south of Scotland has signed a deal believed to be worth £30m to take over the company behind the UK's largest sawmill.

BSW, based in Earlston, bought Dalbeattie firm, Howie Forest Products, with funding from RBS.

BSW is the biggest business of its kind in Britain and employs more than 650 people in the UK and in Latvia.

Both companies can trace their roots back 150 years and local politicians are now looking for assurances on jobs.

BSW, which operates five mills in the UK and one in Latvia, said the the deal was part of a long-term expansion drive aimed at enhancing the future profitability of the group and security to its customers and suppliers.

Tony Hackney, BSW chief executive, said: "Howie Forest Products is an established, profitable business which is well managed and deserves its rightful position as the UK's number one sawmill."

The company supplies pallets and packaging as well as products for gardening and DIY centres.

The deal was welcomed by the SNP MSP for the South of Scotland Alasdair Morgan.

He said: "I think it is also positive that this is a merger of two businesses which are headquartered in the south of Scotland."

However, he added: "I am keen to find out more about BSW's plans for Howie and will be seeking an early meeting with its chief executive."

Dumfries and Galloway Labour MP Russell Brown said the management of both firms had been "very positive" about the move.

"Howie's management have already assured me that the merger will pose no threat to the workforce in Dalbeattie," he said.

"Hopefully this move will signal the potential in time to expand production and create even more jobs at this vital local employer, particularly as all the signs are that we will emerge from recession soon."

Crucial contracts

South of Scotland Lib Dem MSP Jim Hume also welcomed the news.

"Howie's is a long established family company and I wish the new set up well," he said.

"It is crucial, however, that timber contracts and the supply chains which form vital connections to smaller companies in the area are maintained."

Galloway and Upper Nithsdale MSP Alex Fergusson said he was "cautiously optimistic" about the move.

"I am greatly encouraged that the high quality identity of the Howie brand is to be retained and that the business itself will remain a separate entity within the BSW Group," he said.

BSW said the only senior executive to leave the enlarged firm would be Robert Howie who established the sawmill side of the business in 1976.

In a statement BSW said: "The remaining executives join the enlarged BSW Group and continue in their current positions, with the Howie Forest Products brand being retained and the business remaining a distinct entity within the BSW Group."