The company will initially acquire 87% stake of U.S. Water for $168m and later buy the remaining 13% interest for a contingent amount based on the business’ future earnings.

Based in St. Michael, Minnesota, U.S. Water Services serves more than 3,600 industrial customers nationwide.

The company provides its industrial clients water management services, including chemical treatment, equipment supplies and engineering.

U.S. Water generated revenue of about $120m in 2014, and Allete expects future revenue growth of 10% to 15% per year.

Allete chairman, president and CEO Al Hodnik said: "Water and energy are intricately linked, and attention to that nexus is increasing.

"Just as with energy, regulation and social expectations will increasingly drive water conservation, especially as water scarcity becomes a growing challenge.

"We believe the demand for sustainable water management solutions will increase over time as large users seek ways to enhance efficiency and improve their bottom line."

Allete is the parent company of electric utilities Minnesota Power and Superior Water, Light and Power of Wisconsin.

The company also owns Allete Clean Energy in Duluth, and BNI Coal in Center, North Dakota. It holds an 8% stake in the American Transmission Co.