UK’s Pennon buys Bristol Waters for £425m and announces special dividend

(Reuters) – British water company Pennon Group has bought smaller Bristol Water for 425 million pounds ($601 million), seeing the acquisition as an attractive opportunity to expand the capabilities of its southwest water unit.

The company also set a £1.5bn special dividend for shareholders on Thursday and announced a share buyback program of up to £400m.

Pennon shares rose 4.2 percent to 1,113.5 pence in early trading.

Pennon said in March it would make a “substantial” return of capital to shareholders using proceeds from the £4.2bn sale of its Viridor unit.

The company on Thursday posted a 14.2% drop in underlying pre-tax profit to £157m for the year to March 31 as demand fell amid the COVID-19 lockdowns. The result was up to his expectations.

It also said the dividend base in 2021/22 should increase by 9% thanks to the earnings from Bristol Water.

($1 = £0.7066)

(Reporting by Shanima A in Bengaluru; Editing by Ramakrishnan M.)