Severn Trent PLC (LON: SVT) was among Footsie's biggest risers as the water firm, which serves the UK's Midlands, is set to buy smaller provider Dee Valley Group for around £78.5mln.
The firm says it's a "natural fit" as Dee operates in neighbouring areas in England and Wales and the purchase is expected to be earnings accretive from completion.
It comes after another offer from investment manager Ancala Fornia for £71.3mln fell through as the Dee Valley board had withdrawn its recommendation of that acquisition.
Under the offer Dee Valley, listed on the FTSE Fledgling index, will receive 1,705p in cash per share and a comparable cash offer for non-voting shares at 1,601p each.
Liv Garfield, Chief Executive of Severn Trent said the purchase represented an opportunity for Severn Trent to apply its successful operating model for the benefit of customers across an enlarged asset base, in a neighbouring geographic area.
Shares added 1.92% to 2,180p.