Veolia Environnement Shares Jump on Report of Highstar Offer

Veolia Environnement SA, the world’s biggest water company, jumped in Paris trading after the infrastructure fund Highstar Capital was reported to be in advanced talks to buy the company’s U.S. waste management unit.

Veolia climbed 3.2 percent, the most since June 27, to close at 9.03 euros after the Reuters report. The stock has fallen 50 percent the past 12 months, valuing the utility at 4.71 billion euros ($5.76 billion).

Chief Executive Officer Antoine Frerot is aiming to cut debt by 3 billion euros by the end of next year to make the company more profitable. Frerot said in May he wants to focus on “promising” countries and will pursue asset sales in the U.S. and U.K. Veolia sold its British unit to Morgan Stanley-backed Infracapital Partners for 1.2 billion pounds in June.

The utility’s U.S. waste management unit may be worth as much as $2 billion, unidentified people familiar with the matter told Reuters. Highstar, a private equity firm based in New York, has financing for the deal and has made a final offer, the newswire reported.

“This is much better than what the market would have expected,” Bryan Garnier and Co. analyst Julien Desmaretz said in a note to investors today. “If this deal closes at this price, Veolia would have already sold 3.2 billion euros out of its asset disposal target of 5 billion in 2012-13.”

Sandrine Guendoul, a spokeswoman for Veolia in Paris, declined to comment.

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