The regeneration of Longbridge in Birmingham is moving ahead after EH Smith - the UK's third largest independent builders' merchants - announced plans to expand its operation on the former Rover car production site.

EH Smith has acquired the former MG Sports and Racing Building at the Cofton Centre from regeneration specialist St Modwen Properties. The 20,715 sq ft premises will enable the Birmingham-based family firm to take on up to 20 new staff.

The new EH Smith branch in Longbridge - the company's 11th operating location - is set to open next spring to supply a wide range of building materials and services to the surrounding area.

The deal follows the sale by St Modwen of the adjoining 157,000 sq ft former MG Rover parts distribution warehouse to PRG Europe, which is now fitting out the building.

John Parker, managing director for EH Smith, which was established 85 years ago and now employs more than 600 people, said: "EH Smith is delighted to be setting down roots in Longbridge and looks forward to becoming part of the community."

Phil Yates, the company's regional director, added: "This is an exciting time for EH Smith, further investing in the city that has been its home for so long. With the ongoing rejuvenation of the area, the community of Longbridge has a terrific future."

Jonathan Green, development surveyor, St Modwen, said: "We are delighted with this sale which further endorses the growing appeal of Longbridge to companies wishing to relocate and expand.

"Work has now started on St Modwen's first phase of new development on the Cofton Centre with the construction of two new units, of 47,502 sq ft and 7,072 sq ft, available for purchase or to let, which will be completed late next spring."

This will create the potential for an additional 300 jobs and it is anticipated that the Cofton Centre will provide more than 1,200 jobs when complete.