UK water utility Severn Trent seeks buyers its analytical business

British water and sewerage group Severn Trent Plc (LON:SVT) announced on Wednesday it had hired Rothschild to help the company dispose of its analytical services business.

Severn Trent said it decided to sell this operation as it had, over recent months, become a smaller entity with a predominantly commercial-customer focus. Through the sale, the company would also address several commitments it had made to England and Wales’ Water Services Regulation Authority, or Ofwat, with regard to the pricing of certain contracts at the analytical services business. The company did not provide any further details concerning the planned sale process.

Severn Trent Analytical Services, which is the trading name for Severn Trent Laboratories Limited, offers potable, wastewater and contaminated land testing services to British commercial and utility clients. Its business contributes some 1.5% of the group’s overall revenue.

The group itself consists of two main segments, the first of which controls the regulated water utility in Severn Trent Water Limited (STWL). This company delivers water and wastewater services to some 4.2m households and businesses in England and Wales. The other division, namely Severn Trent Services (STS), offers water and wastewater treatment and operating services to utilities, municipalities and commercial clients worldwide.

For the fiscal year to 31 March 2012, Severn Trent booked an underlying profit before interest tax and exceptional items of GBP504.2m (USD785.6m) on a total turnover of nearly GBP1.8bn.