Severn Trent sells lab business

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Severn Trent sold its laboratories business in a deal triggered by competition concerns over the water company’s ownership.

The business, which provides analysis and sampling services to the water, construction and waste industries, has been bought by Australia’s ALS, one of the world’s largest testing companies with more than 13,000 staff.

Severn Trent Analytical Services, which has offices in Wakefield, Coventry and Runcorn, is one of three divisions within Severn Trent’s non-regulated services arm.

Last summer, the company offered to sell the laboratories division in response to a complaint to water regulator Ofwat about the structural links between the water business and Severn Trent Analytical Services.

The complaint alleged that the division had won contracts to supply water analysis services to Yorkshire Water and South Staffordshire Water by pricing below cost. Ofwat opened a formal investigation in December 2010.

The business accounts for about 1.5 per cent of revenues at Severn Trent Group, which provides water and wastewater services to 4.2 million households and businesses.

The group covers households in south east Sheffield, north Derbyshire and north Nottinghamshire.