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UK's Pennon snaps up Bristol Waters for 425 million pounds, unveils special dividend

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(Reuters) - British water company Pennon Group has bought smaller peer Bristol Water for 425 million pounds ($601 million), calling the acquisition an attractive opportunity to expand the capabilities of its South West water unit.

The company on Thursday also set a special dividend of 1.5 billion pounds for shareholders and announced a share buyback programme worth up to 400 million pounds.

Shares of Pennon were up 4.2% at 1,113.5 pence in early trading.

Pennon in March had said it would make a "substantial" return of capital to shareholders using proceeds from the 4.2-billion-pound sale of its unit Viridor.

The company on Thursday posted a 14.2% fall in underlying profit before tax to 157 million pounds for the year ended March 31, as demand fell during COVID-19 lockdowns. The result was in line with its expectations.

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

($1 = 0.7066 pounds)

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

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