First disposal for Vivendi unit

JPMorgan Partners and Thomas H. Lee have bought the US waterworks division of Vivendi Environnement for $620m.

US buyout firms JPMorgan Partners and Thomas H. Lee Partners have completed what is likely to be the first in a series of acquisitions of Vivendi assets by financial buyers with the purchase of USFilter, the waterworks distribution business of Vivendi Environnement.

The two firms have agreed a price of $620m for the business, which operates through a network of over 140 sales and service centres in the United States. Last year the firm reported turnover of $1.1bn. The transaction, expected to complete in the fourth quarter, is subject to normal regulatory approvals.

The sale furthers USFilter's strategy of divesting non-core assets and focusing on its water-wastewater equipment and consumer and commercial businesses.

Under the terms of the deal, JP Morgan Partners and Thomas H. Lee will each invest about $105m with the remainder being leveraged. Debt financing would come from Goldman Sachs Group, JP Morgan Chase and UBS.

Thomas H. Lee Partners’ interest in Vivendi’s attempts to reduce its debt pile is unlikely to end with this acquisition. The firm is also part of a consortium bidding for Vivendi Universal’s US and European publishing division. The consortium, which includes Blackstone Partners BNP Paribas and Apax Partners have tabled an indicative offer for the business, thought to be in the region of E3.4bn.

Goldman Sachs acted as financial advisor to USFilter on the transaction. O'Melveny & Myers and Weil, Gotshal & Manges acted as legal advisors to JPMorgan Partners and Thomas H. Lee Partners repectively. Sutherland Asbill & Brennan provided legal advice to USFilter.