SEVERN TRENT, the FTSE 100 utility, is considering a sale of its environmental testing and waste-management units as part of a wide-ranging review of the business orchestrated by chief executive Colin Matthews.

The company has made no decisions about the future of Severn Trent Laboratories or Biffa, but has asked investment bank Citigroup to help decide whether they would be worth more under different ownership.

It is understood that in the case of Biffa, one of Britain’s largest waste-management businesses, Matthews is considering all options, including expanding the unit via further acquisitions, as well as a sale.

Laboratories, which has 2,500 employees and recorded sales in 2003-4 of £170m, is seen by analysts as the most likely to be sold. It is the world’s biggest environmental testing business, and works for commercial and government organisations in undertaking analysis of soil, air and water samples.

At Severn Trent’s interim results last December, Matthews described the US market for the Laboratories division as “challenging”.

Citigroup’s appointment is one of the most significant developments at Severn Trent since Matthews took over a year ago. The former British Airways, Hays Group and Transco executive originally joined the utility as a non-executive director in October 2003.

Separately, it emerged this weekend that BBA is in exclusive talks to sell Fiberweb, its materials-technology division, to Polymer Group International, the US industrials group.

Polymer is understood to have seen off competition from private-equity groups including Candover and Doughty Hanson, although the price it has offered is thought to fall at least £100m short of the original £750m asking price.

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