There is a risk that Scotland becomes a subsidiary economy with all the big decisions being taken outside Scotland

Alec Carstairs, Ernst and Young

Both companies have stated that the deal will not lead to job losses.

Chris Mellor, Anglian Water's chief executive, said: "In the UK water sector, outsourcing has only just begun.

"As water companies concentrate on fewer activities, there will opportunities for groups like ours to construct, operate and maintain a wide range of assets."

Anglian, whose shares closed on Wednesday at 605 pence per share, provides water and sewerage facilities to about 5.8 million people in the UK.

It also provides water and wastewater services in the Czech Republic, Chile and China through its Anglian Water International.

'Subsidiary economy'

The takeover means that Scotland will lose another corporate headquarters.

Although a substantial number of jobs are expected to move to Edinburgh as result of the deal, ultimate control of the company will be in Huntingdon in Cambridgeshire.

Alec Carstairs, from Ernst and Young, said: "In this particular case, another plc is moving its headquarters into England, or outside Scotland.

Fraser Morrison: Reaping rewards

"That's disappointing for Scotland plc. There is a risk that Scotland becomes a subsidiary economy with all the big decisions being taken outside Scotland."

Morrison was founded just after WWII by Alexander Morrison and was floated in 1995 at 115 pence per share.

Last year, the company reported profits of �26.8m on a turnover of �509.8m.

Morrison's Bob Green said: "We see this as great for our customers and staff. This means we can become part of a much bigger organisation. It will enable us to take a significant leap forward.

Complement skills

He added: "Our strategies are aligned with water companies which are under pressure to increase their efficiency and to develop more in outsourcing - an area we are involved with.

"By bringing the two companies together we can complement each other's skills."

Morrison chairman, Fraser Morrison, is expected to join Anglian's board in a non-executive role.

Morrison's shares jumped 8% - up 30p at 384p - after the bid. Anglian slipped 16p to 589p.

It is understood the merger will be able to provide a wider range of support services to not just utilities but also to the transportation and property sectors.