A water company fined for illegally dumping sewage has spent £380 million buying a rival, despite pressure to invest in stopping leaks and pollution.
Pennon, which owns South West Water and recently acquired Bournemouth Water and Bristol Water, has bought Sutton and East Surrey (SES) Water from its Japanese owners.
Industry regulator Ofwat last year named SES, which has £291 million in debt and supplies 750,000 customers in south-east England, as one of the four worst financially performing water companies.
But South West Water has also come under fire for its performance and was fined £2.15 million last year for illegal sewage leaks in Devon and Cornwall.
Chief executive Susan Davy said: ‘SES Water is a fantastic fit for Pennon as we further expand our presence in water supply.’
CEO Susan Davy (pictured) said: ‘SES Water is a great fit for Pennon as we further expand our presence in water supply’
The sector has faced continued criticism due to high debt levels, leaks and sewage spills, putting pressure on operators to invest in infrastructure.
Pennon is raising £180m from shareholders to help finance the takeover.
The plan to buy SES from Sumitomo Corporation and Osaka Gas must be approved by regulators at the Competition and Markets Authority with input from Ofwat.
Russ Mould, investment director at AJ Bell, said: ‘Pennon’s decision to spend £380 million could raise eyebrows.’