Shares in Marlowe PLC (LON:MRL) soared more than 10% after it told investors it had bought water treatment firm H2O Chemicals Limited.
Marlowe has paid £2.8mln for the Leeds-based firm, which it expects to be earnings enhancing in its first full year of ownership.
It also believes that H2O will double the size of the group’s current water treatment division and bring in a large new base of customers.
“The acquisition of H2O will significantly expand Marlowe's water treatment activities and marks the next step towards fulfilling our strategic objective of providing national coverage in each of our sectors,” said chief executive Alex Dacre.
“H2O is a good fit and has some excellent customer relationships that will further enhance our platform for growth.”
In the 12 months to 31 January 2016, H2O reported underlying adjusted earnings (EBITDA) of £0.6mln, on revenues of £6.1mln.
Marlowe says it will finance the acquisition through an extension of the firm’s existing debt facility with Lloyds Banks.
As part of the deal, the managing director of H2O will receive 212,000 Marlowe shares and will become a senior executive in the firm’s water treatment division.
Shares were up 17.5p, or 11%, to 185p.