Pennon Group (LSE: PNN) shares rose 2.4% Wednesday after the water company unveiled a £380 million takeover of Sutton & East Surrey Water (SES Water) from Sumitomo and Osaka Gas. The deal, funded via an equity raise, will expand Pennon’s presence across Southern England.

The purchase of SES Water, which serves around 719,000 customers, is expected to be earnings accretive from year one. Pennon stated the acquisition will “generate attractive returns” and enhance the financial resilience of SES Water.

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To part-fund the deal, Pennon launched an equity raise of up to £180m through a placing and retail offer. The company stated this will ensure pro forma leverage and capital structure remains aligned with its 55-65% water business gearing target post-acquisition.