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Shares in Northumbrian Water have jumped 12% following a report that the company could receive a £1.7bn takeover offer from a Canadian pension fund.
The Sunday Times reported that the Ontario Teachers' Pension Plan was thought to be in talks with banks over raising money for a bid.
The pension fund already owns a 27% stake in the UK company.
Northumbrian Water provides services to 4.3 million people in the north-east and south-east of England.
It provides water and sewerage services to 2.6 million people in the north-east of England, and water services to 1.7 million in the south-east of England where it trades as Essex & Suffolk Water.
Shares in Northumbrian Water closed up 30.4p, or 11.8%, at 288p.
The report of the takeover interest also caused shares in other utility companies to rise. Pennon Group rose 5%, Severn Trent climbed 4% and shares in United Utilities were up 2.8%.
In November, Northumbrian Water said that business closures in the north-east of England had left it with bad debts of £1.7m in the six months to September 2009.
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