The prospects for our combined water businesses will be significantly enhanced as a result of the merger

Roger Carr, chairman, Thames Water

"The prospects for our combined water businesses will be significantly enhanced as a result of the merger."

Thames has recommended shareholders accept the offer which, at 1215p, values shares in the company at 43% more than their average price over the last month.

RWE itself has bought 20% of Thames' equity, the company announced on Monday.

Thames, which would be renamed "Thames Water, a division of RWE" after the deal, and RWE are a "complementary fit", Thames said on Monday in a document detailing the deal.

Global giant

While Thames has 12 million UK customers, and 11 million through operations in the Asia-Pacific, Americas and Eastern Mediterranean, RWE has a German and continental presence in the water sector.

RWE, which employs 175,000 people, owns 22.5% of Berlin Water Works, and has stakes in many other firms in Germany's diverse water sector.

RWE also owns a �4bn oil business which it is attempting to sell to BP to help fund the purchase of Thames.

The takeover will not lead to significant job losses at Thames, with 8-9 posts dealing on shareholder issues set to go, the company confirmed to BBC News Online.

Head's future undecided

While Bill Alexander, Thames' chief executive, will lead the merged water firm, the future of Mr Carr has yet to be decided, a Thames spokesman said.

Thames' takeover of US utility E'town, which has yet to receive regulatory approval, is fully supported by RWE, Monday's document said.

RWE will assume �2.5bn in debt which Thames took on to buy E'town.

Thames, which in the UK serves London and the Thames Valley, ranks as the world's third largest listed water firm, in terms of population served, the document said.

Thames Water shares jumped 52p to 1212p in London.

Elsewhere in the sector Anglian Water rose 15p to 540p in sympathy, with United Utilities rising 18p to 658p.