Pennon Group buys Sutton East Surrey Water for £380m

Pennon Group has bought Sutton and East Surrey (SES) Water for £380m in a bid to expand its foothold in Southern England.

In October, water regulator Ofwat said SES along with other firms in the sector needed to deliver a turnaround in financial performance.

The industry is under pressure to improve water quality and reduce leakages after a spate of problems.

The deal is awaiting approval from the Competition and Markets Authority.

SES is one of six water-only providers in England, with sewage treatment services provided by Thames Water and Southern Water serving customers in Southern England.

The sale comes despite growing concerns over the UK's water industry, which has been accused of paying out excessive salaries and perks to executives whilst preceding oversevere leakage and pollution failures.

It's Japanese owners, Sumitomo Corporation and Osaka Gas, put the business up for sale in February 2023, just as water companies faced a wave of protests across the country over the impact on water ways and services.

If the deal goes ahead, Pennon Group, which owns South West Water will add SES's 750,000 customers to its books.

It follows Pennon's previous acquisitions of Bournemouth Water and Bristol Water.

Ofwat named a dozen water companies including SES in a report, stating they were "falling short" on performance measures around leakages, supply and reducing pollution.

The regulator also expressed concern over the weakness of several companies' balance sheets.

The regulator judges water companies in England and Wales against "stretching" targets set in 2019 for a five-year period.

If they fail to meet targets, Ofwat restricts the cash that they can take from customers.

It concluded that companies will have to give money back to customers by reducing their bills in 2024-25, rather than each bill payer getting a lump sum refund.