Siemens AG announced today it has agreed to purchase the worldwide systems and services businesses of the USFilter Corp. for a cash price of $993 million from France's Veolia Environnement SA.
The transaction, which is expected to close before the end of September, is subject to regulatory approval.
"This acquisition is an important step in the framework of strengthening our group portfolio. The growing water business will play a critical role within our industrial activities at Siemens," Joergen Ole Haslestad, president of Siemens' Industrial Solutions and Services division, said in a press release. "With it, we will be able to expand our product and service offerings for our customers, in particular within the world's largest water market, the U.S."
The purchase includes USFilter's systems and services businesses, which account for about 80% of the total company and generate annual sales of $1.2 billion.
USFilter Corp. is headquartered in Palm Desert, Calif. and Houston and has 120 offices worldwide. USFilter is the leading provider of municipal and industrial water treatment products and services in the North American market.
Siemens is trying expand on the U.S. market, where it competes with General Electric Co. in industries such as power generation and medical equipment. General Electric in 2002 agreed to buy Hercules, Inc.'s Betz Dearborn industrial water-treatment business for $1.8 billion in cash.
Other transactions in the water-treatment industry include the acquisition of Wedeco Water Technology AG, a German maker of water-purification equipment, by ITT Industries, Inc., the world's largest maker of pumps
Paris-based Veolia decided to shed divisions of USFilter as it focuses more on long-term contracts for water services with companies and towns. USFilter was bought by Veolia in 1999 under former Chairman Jean-Marie Messier. The company in March wrote down the value of the unit by 2.23 billion euros, leading to a net loss for 2003.
Veolia, which does a fourth of its business in the U.S., is the world's largest water company. Chief Executive Henri Proglio's, trying to cut debt that stood at 12.8 billion euros ($15.2 billion) at the end of September, said last year he would sell USFilter's Culligan and Everpure units, which supply bottled water, water softeners and filtration systems.
Siemens said it plans to complete the takeover of the businesses, which employ 5,800 people worldwide, before the end of September. The new units will be part of the industrial solutions and services business, which belongs to the company’s automation and controls industrial group.
Siemens will keep the headquarters of the USFilter units it's buying in Palm Desert, Calif. USFilter's profitability is close to the earnings target at the industrial solutions and services division of an operating margin of between 4-7%.
Source: Bloomberg
