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Severn Trent to de-merge Biffa

Parent company Severn Trent has announced it is to de-merge its waste management business, Biffa.

After a group-wide review, a sale has been discussed for the High Wycombe-based operation which employs 5,000 people and provides waste services for private firms and local authorities.

Severn Trent chief executive Colin Matthews said: “Our review demonstrated that the growth and regulation drivers of the two businesses are very different and that few operational synergies would be lost through separate ownership.

“The board has therefore concluded that shareholders, customers and employees would be best served by the creation of two independently quoted businesses.”

Severn Trent also said that it expects its annual profits to be 30-35% higher than last year, and with the review concentrating on improving all the groups businesses, including waste and water, it is hoped the de-merger will be complete by the end of the year.

Matthews added: “Severn Trent and Biffa are both leading companies in their separate industries and will continue to benefit from scale and development opportunities. Shareholders will have greater choice and the opportunity to invest in two businesses with different investment characteristics.

“Following the conclusion of our review, I shall provide more details on the de-merger and our overall group strategy at our results presentation on Tuesday 6 June.”

Biffa is one of the UK’s leading integrated waste management companies and was acquired by Severn Trent in 1991. It has since grown both organically and through the acquisitions of UK Waste and Hales.

Following the de-merger, it is expected to be a constituent of the FTSE 250. However, the decision remains subject to shareholder and other approvals and to further detailed due diligence.

While the de-merger is expected to be completed by the end of 2006, the board is also currently considering options for Biffa Belgium, including possible disposal.

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