Utilities group Pennon has acquired the holding company of Sutton and East Surrey Water (SES Water) and other ancillary businesses in a £89m deal.
The owner of Bristol water and South West Water announced that it acquired 100% of the issued capital Osaka Gas Water UK from Sumitomo Corporation and Osaka Gas. The Exeter-based group added that it intends to issue new shares to raise up to £180m to help fund the deal. SES Water and other ancillary businesses has over 750,000 customers and a forecast shadow Regulatory Capital Value of £351m.
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Chief executive Susan Davy said: “SES Water is a fantastic fit for Pennon as we further expand our presence in water supply across Southern England, building on our successful similar acquisitions of Bournemouth Water and Bristol Water alongside the adoption of water supply in the Isles of Scilly.
“The business is a proven, high-quality water operation. We are particularly impressed by the innovation and technology-led solutions implemented by SES Water.
“As part of the Pennon Group, we will enhance SES Water’s financial resilience and better position the business to serve its customers and all stakeholders, as has proven to be the case with our acquisitions of Bournemouth Water and Bristol Water.”
She added: “We are able to invest in SES Water’s resources infrastructure, environment and people thanks to our strong financial performance and long-term UK shareholder base, delivering a seamless transition for SES Water’s customers while also providing a more robust and reliable service in the medium term.
“We expect SES customers to benefit from Pennon’s stewardship of the business, including being able to offer them the opportunity to participate in our unique WaterShare scheme and participate in the ownership of their local water provider.”
In its half year results announced at the end of last year (November 29) Pennon saw its profits fall 90%. The group added profit after tax dropped from £18.5m to £1.8m in the first half of the year. Pennon blamed the drop on higher inflation driving costs.
The group reported non-underlying cost items before tax of £5.9m, including one-off costs of business transformation, drought and renewable energy acquisitions.
