Highstar Said to Be Near $1.85 Billion Deal for Veolia Unit

Highstar Capital is nearing a deal to acquire Veolia Environnement SA (VIE)’s U.S. waste-management business for about $1.85 billion, according to people with knowledge of the matter.

The purchase may be announced as soon as Thursday, said one of the people, who declined to be identified because the talks are private. Highstar, the infrastructure-focused private equity firm once affiliated with American International Group Inc. (AIG), beat bids from buyout firm Madison Dearborn Partners LLC and Brazilian conglomerate Estre Ambiental SA, the people said.

Veolia, the world’s biggest water company, is shedding the unit as it tries to cut debt by 20 percent to 12 billion euros ($14.7 billion) by the end of next year. Antoine Frerot, chairman and chief executive officer of the Paris-based company, said last month he wants to focus on “promising” countries and will pursue asset sales in the U.S. and U.K.

Veolia plans to sell 5 billion euros worth of assets this year and next, cut operating costs by 120 million euros in 2013 and narrow its geographic reach. On June 28, Veolia sold its U.K. regulated-water business to Infracapital Partners for 1.2 billion pounds ($1.9 billion).

Veolia ES Solid Waste Inc. has more than 300 locations that provide hazardous and non-hazardous waste management and industrial cleaning services, the company said on its website.

Highstar already operates U.S. waste management businesses Advanced Disposal Services Inc. and Interstate Waste Services Inc, according to the New York-based company’s website.

To contact the reporters on this story: Jeffrey McCracken in New York at jmccracken3@bloomberg.net; Sonja Elmquist in New York at selmquist1@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net