Acquisition, etc

Severn Trent PLC
5 June 2000


Not for release, publication or distribution in or into Australia, Canada,
Japan or the United States of America

Severn Trent Plc

CONDITIONAL ACQUISITION OF UK WATE FOR  £380 MILLION

Severn Trent Plc, parent company of Biffa Waste Services, announces today that
it has entered into a conditional agreement to acquire UK Waste for a
consideration of £380 million (including the assumption of indebtedness). 

UK Waste is one of the largest waste operators in the UK and has fully
integrated solid waste operations throughout the country including
industrial/commercial and residential collection services, recycling
processing facilities, transfer stations and operational landfills.  In 1999,
UK Waste had turnover of £187.3 million and earnings from continuing
operations before goodwill amortisation and exceptional items of £23.0
million.  

*  The acquisition of UK Waste will establish Biffa as the leading waste 
   business in the UK with the largest industrial and commercial collection 
   fleet
*  The combination of UK Waste's collection fleet with Biffa's fleet will 
   allow Biffa to make a further step reduction in its cost of service
*  Biffa's capacity to provide high quality service at lowest cost to large 
   industrial accounts, purchasers of integrated waste services and national 
   multi-site accounts will give it the potential to achieve further rapid 
   and sustainable growth in these collection markets
*  The Directors believe that Biffa will deliver pre-tax synergies of at 
   least £15 million per annum from savings from the enlarged collection 
   infrastructure, improved vehicle utilisation and the elimination of 
   regional management and head office costs

The Acquisition, which is conditional on competition clearance, will be funded
entirely from new borrowings and is expected to enhance earnings before
goodwill amortisation in the financial year 2001/2. 

Commenting on the Acquisition, Robert Walker, Deputy Chief Executive of Severn
Trent said: 'This is a very exciting deal for both Severn Trent and Biffa as
well as our shareholders and employees.  Of the possible opportunities for
growing Biffa's business in the UK there are none that offer greater
potential.  Buying UK Waste creates a platform for significant further growth
in our waste business.'

David Arculus, Chairman of Severn Trent said: 'This acquisition represents
another successful step in growing our non-regulated businesses.  Significant
progress has now been achieved in both our services and waste businesses and
Severn Trent is very much on track to achieve its growth targets in both these
businesses.  This is a major move towards achieving our goal of becoming an
international environmental services business.'


THERE WILL BE A PRESENTATION TO ANALYSTS AND INSTITUTIONS AT 9.30 A.M. ON
MONDAY 5 JUNE AT TRINITY HOUSE, TRINITY SQUARE, TOWER HILL LONDON


Press enquiries


Severn Trent
Robert Walker                           0121 722 4000
Martin Bettington                       01494 521221

Schroder Salomon Smith Barney
Will Samuel                             020 7658 6000
William Barter
Michael Hornung

HSBC
Nick McCarthy                           020 7283 5230

CSFB
Andrew Fullerton                        020 7888 8888

Brunswick
Simon Holberton                         020 7404 5959


This summary should be read in conjunction with the full text of the 
following announcement.

Nothing in this press release should be construed as a profit forecast or be
interpreted to mean that the future earnings per share of Severn Trent will
necessarily be the same as, or greater than, the earnings per share for
completed financial periods.

Schroder Salomon Smith Barney, which is regulated in the United Kingdom by The
Securities and Futures Authority Limited, is acting for Severn Trent and for
no-one else in relation to the Acquisition and will not be responsible to
anyone other than Severn Trent for providing the protections afforded to its
customers nor for giving advice in relation to the Acquisition. 



Severn Trent Plc

Conditional acquisition of UK Waste for £380 million

Introduction

Severn Trent announces today that it has entered into a conditional agreement
to acquire UK Waste.  

The consideration for the Acquisition is £380 million (including the
assumption of indebtedness).  In order to finance the Acquisition the Severn
Trent Group has entered into new banking facilities, further details of which
are set out below.

Severn Trent believes that the Acquisition represents an excellent opportunity
to acquire a leading waste operator in the United Kingdom, with a strong
position in solid waste collection.  The Acquisition will represent a
significant step towards Severn Trent's target of growing its non-regulated
businesses to £1 billion in annual turnover and continues Severn Trent's
stated strategy of reshaping the Group into an international environmental
services business.

The Acquisition is conditional on competition clearance.

Background to and reasons for the Acquisition

The regulatory environment for waste is driving the UK to catch up with Europe
and reduce the amount of waste that is sent to landfill.  Under Government
proposals, the proportion of waste in each of the recovered, incinerated and
composted segments will increase whilst the proportion of waste deposited in
landfill will decline from 65% today to 42% in 2020.  Whatever the eventual
route to achieve this reduction in landfill, the separation and transportation
of waste streams will become the common denominator, providing a growth
opportunity for efficient collection operators.

The increasing burden of environmental legislation and the rising cost of
waste management has also raised corporate awareness of the importance of
implementing effective waste disposal schemes.  Customer demands have changed
with greater focus on service expectations, and Biffa's successful business
model has driven collection growth of 17.5% compound over the past seven
years.

Despite limited consolidation in the 1990s the waste market in the UK remains
highly fragmented. Biffa, as one of the leading waste businesses in the UK,
has the size and support infrastructure to service all segments, a position
which will be significantly enhanced by the acquisition of UK Waste.

Biffa's growth in profits over the last seven years has been largely as a
result of growth in its industrial and commercial collection activities. 
Biffa's success has been driven by its strong sales force, customer service
development, existing operating advantages and strong management.  The
acquisition of UK Waste will allow Biffa to apply these skills across UK
Waste's business and to make a further step reduction in Biffa's overall cost
of service.  Both these factors will give Biffa the potential to achieve
further rapid and sustainable growth.

The Directors believe that significant synergies, in excess of £15m per annum,
will be achieved across the combined UK businesses:

*  by condensing the collection depot networks and vehicle fleets a step 
   change in unit operating costs will be achieved through increased 
   efficiency and route density

*  savings will also be achieved from the integration of UK Waste's and 
   Biffa's IT and financial systems and reducing regional management and head 
   office costs.  Biffa's existing IT system has sufficient capacity to 
   service the enlarged business.

The Acquisition also brings UK Waste's paper recycling infrastructure together
with Biffa's alliance with SCA (one of the world's largest paper companies) to
create a business that will be involved in the recycling of in excess of
300,000 tonnes per annum.

Information on UK Waste

UK Waste is the one of the largest waste operators in the UK and has
operations in all the major cities in England (including London, Birmingham,
Manchester, Bristol, Hull, Newcastle and Leeds), as well as Scotland, Northern
Ireland and Wales.  UK Waste has fully integrated solid waste operations that
include industrial/commercial and residential collection services, recycling
processing facilities, transfer stations and operational landfills.  In
addition, UK Waste offers special waste collection and disposal services,
remediation services, contract-backed municipal collection services and has
gas-to-energy operations.  UK Waste's assets include 26 collection depots, 8
operational landfill sites, 11 waste transfer stations and 14 special waste
transfer stations/bulk liquid tanker depots.

In the financial year to 31 December 1999, UK Waste had turnover of £187.3
million and underlying operating profit of £23.0 million.  Underlying
operating profit excludes goodwill amortisation of £7.4 million, £1.1 million
of net exceptional income and net costs of £4.0 million relating to the former
Waste Management International PLC head office (which is not being acquired). 
The net assets, which take into account net inter-company liabilities and
third party borrowings of £142.5 million at 31 December 1999, were £138.4
million.

Financial effects of the Acquisition

The transaction is expected to increase shareholder value, following
implementation of the synergy benefits.  Returns are forecast to exceed Severn
Trent's cost of capital and the Acquisition is expected to be earnings
enhancing before goodwill amortisation, in the financial year 2001/2.

The Acquisition will be funded entirely from new borrowings.  Severn Trent has
arranged a new £1.2 billion multi-tranche facility with Barclays Bank, HSBC,
Deutsche Bank and The Royal Bank of Scotland, which will be used inter alia to
fund the Acquisition, to refinance existing facilities and meet the ongoing
cash requirements of Severn Trent's existing businesses.

Principal terms of the Acquisition

Under the terms of the Acquisition Agreement, Severn Trent has agreed to
purchase UK Waste from the Vendor for a total consideration of £380 million
(including the assumption of indebtedness).  The Acquisition Agreement
provides for certain adjustments to be made to the consideration to reflect
changes in the net assets and indebtedness of UK Waste since 31 December 1999
(subject, in the case of the net assets adjustment, to an agreed de minimis
level).

The Acquisition Agreement contains warranties and specific indemnities given
by the Vendor (including indemnities in relation to certain taxation and
environmental matters), subject to agreed limitation thresholds.  In addition,
the Vendor has agreed to provide at completion a third party issued default
bond of £45 million that will be available to meet any indemnity claims or
arbitrated warranty claims which may arise under the Acquisition Agreement. 
The principal amount of the bond will reduce over time and on resolution of
certain specific taxation issues.

Under the Acquisition Agreement, Waste Management has agreed not to compete
with UK Waste for a period of 3 years from completion.

Completion of the Acquisition is conditional, inter alia, on receipt of
competition clearance and the representations and warranties given by each
party remaining true and correct as at the date of completion.



Nothing in this press release should be construed as a profit forecast or be
interpreted to mean that the future earnings per share of Severn Trent will
necessarily be the same as, or greater than, the earnings per share for
completed financial periods.

Schroder Salomon Smith Barney, which is regulated in the United Kingdom by The
Securities and Futures Authority Limited, is acting for Severn Trent and for
no-one else in relation to the Acquisition and will not be responsible to
anyone other than Severn Trent for providing the protections afforded to its
customers nor for giving advice in relation to the Acquisition. 



APPENDIX I
Definitions


'Acquisition'                    the proposed acquisition of UK Waste by 
                                 Severn Trent

'Acquisition Agreement'          the agreement dated 5 June 2000 and entered 
                                 into between the Vendor and Severn Trent 
                                 pursuant to which the Vendor has agreed to 
                                 sell and Severn Trent has agreed to purchase 
                                 the entire issued share capital of WM 
                                 Holdings (Jersey) Limited 

'Biffa'                          Biffa Waste Services Limited

'Directors' or 'Board'           the directors of Severn Trent

'Schroder Salomon                Salomon Brothers International Limited
Smith Barney'

'Severn Trent' or 'Company'      Severn Trent Plc

'Severn Trent Group' or 'Group'  Severn Trent and its subsidiaries

'UK Waste'                       WM Holdings (Jersey) Limited and its 
                                 subsidiaries

'Vendor'                         Waste Management International B.V.

'Waste Management'               Waste Management Inc.