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Scottish water supplier Business Stream has announced it will buy the business customers of Southern Water – effectively doubling its customer base and creating one of the largest companies in the UK non-domestic water market. Chief executive Johanna Dow talks to Utility Week about how the deal was reached, the company’s main focus, and its plans for the future.
Q: How was the deal reached?
A: We have been in discussion now for almost 12 months. We were always very open about the fact that we were looking for opportunities to enter the market on scale, and that acquisition was one of those routes to market. We did a bit of research about 15 months ago to scan the market and look for who we thought might be a suitable acquisition target, and from that we identified Southern Water. We approached them following that piece of research.
Q: How many business customers does this mean Business Stream will now have?
A: Well what it means is that we will effectively double the size of our business in terms of customer numbers. So we’ll be acquiring somewhere between 100,000 and 105,000 customers.
Q: What was it that attracted to Southern Water’s customer portfolio?
A: A number of different things. Size was an important factor, so the fact that Southern has about 5 per cent of the combined UK market share was a big driver. Location was the other big driver for us as well, so the fact that it is located in the south of England, with Thames Water, Anglian Water and Water Plus all on the immediate doorstep. Although we’ve used this transaction to gain that immediate scale, we are also very much with an eye on medium to longer term growth. And the location will be important for that growth.
Q: Will Business Stream set up a head office in the South?
A: The combined business will be run from Business Stream’s headquarters in Edinburgh, with the exception of an account management team who will be based locally.
Q: Does Business Stream have plans for further acquisitions or other deals to increase market share?
A: We’ve made no secret of our ambitions, that we want to grow the business, and we’ve always said that we were looking at joint venture, acquisition, partnership etc. I have to say, our immediate priority just now is to get this acquisition bedded in. It is really important for us that we make sure that the experience for customers is as seamless as possible. We want to focus on that initially, but I would never say never, anything is possible. We’re definitely very growth-focussed.
Q: Do you have any pressing concerns ahead of market opening?
A: I think we’re probably no different from any other company, it’s really just now about the timescale. Nine months is really not an awful lot of time, and I think there is still much to do to create the market infrastructure and everything else that is needed to compete in that market. I think we’re very well on that journey, but there’s no doubt that there is not a huge amount of time left.
Q: What is Business Stream’s main focus now going forward?
A: Definitely to make this integration as seamless as we possibly can. A key focus for us, as always, on looking after our existing customers in Scotland, and indeed in England too. A key focus is English market readiness generally, but we want to make sure that we really embed this transaction, and do it well.
We’re incredibly excited about this deal. We said we wanted to enter the market on scale, and the fact that this will position us as the biggest retailer in the UK is something that we’re very excited about.
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