September 13, 2002

Equipment Unit of U.S. Filter Will Be Sold for $620 Million


Vivendi Environment, the water company, agreed yesterday to sell the equipment distribution unit of its U.S. Filter Corporation for $620 million to private equity firms.

The firms, Thomas H. Lee Partners and J. P. Morgan Partners, will buy the unit, the Waterworks Distribution Group, which supplies pumps, pipes, valves and water meters.

Vivendi Environnement is selling parts of U.S. Filter, based in Palm Desert, Calif., after slowing demand eroded profit. Until June, a majority of Vivendi Environnement was owned by Vivendi Universal. Stephen Murray, a general partner with J. P. Morgan Partners, said Thomas H. Lee, based in Boston, and J. P. Morgan, which originally made separate bids for the unit, planned to pay about $210 million in equity and borrow the remainder from banks. The banks include J. P. Morgan Chase & Company, the parent of JPMorgan Partners; the Goldman Sachs Group, which is advising U.S. Filter on the sale; and UBS Warburg.

Vivendi Environnement bought U.S. Filter in 1999 to help it increase its share of the global water-treatment market. At the time, 63 percent of Vivendi Environnement was owned by Vivendi Universal, a media company. Earlier this year, Vivendi Universal reduced its stake to less than 50 percent by selling shares worth 1.5 billion euros.

Vivendi Environnement announced in March that it would seek 1 billion euros from the sale of assets that are depressing earnings or not part of its main business.

The Pall Corporation agreed in February to buy U.S. Filter's filtration and separations business for $360 million in cash. The unit had sales of about $270 million. U.S. Filter also has a water and wastewater group, which has annual revenue of $1.6 billion, as well as a consumer and commercial group, which sells water through its Culligan brand.