The deal, which takes effect from April next year, will create the third biggest company in the UK non-domestic market for water and waste water services, with a combined market share of over 10%.
Around 1.2 million businesses and public bodies in England will be able to choose their water supplier, an option only currently available to the largest users.
This competition will encourage water suppliers to offer new and improved services, keener prices and better service levels.
In the eight years since Scotland created the world’s first non-domestic water market, Business Stream’s customers have benefited from more than £133m in savings and conserved more than 24 billion litres of water through efficiency initiatives.
The acquisition by Business Stream is a significant milestone in its plans to win new customers in England, where its existing customers include House of Fraser and Bernard Matthews.
Southern Water serves around 105,000 non-domestic customers across Kent, Sussex, Hampshire and the Isle of Wight, and this acquisition will almost double the size of Business Stream’s customer base.
In order to provide continuity of service to Southern Water’s customers and maintain existing relationships, a number of Southern Water’s account managers will be transferring to Business Stream as part of the acquisition. In addition, up to 40 new jobs will be created at Business Stream’s Edinburgh headquarters to support the expanded operation.
Jo Dow, Business Stream chief executive, said: “The acquisition of Southern Water’s customer base provides us with a springboard for growth ahead of the English market opening next year. The new market will create huge opportunities for Business Stream.
“We are ideally placed to secure market share by leveraging our knowledge, capability and experience, gained from eight years of operating in the highly competitive Scottish market.”
Matthew Wright, CEO of Southern Water said: “After looking carefully at the options available to us we have decided to sell our non-household retail business to Business Stream, a specialist retailer that has been at the forefront of the competitive market in Scotland for eight years.