Siemens to Buy U.S. Filter From French Owner

Siemens, the German engineering and technology conglomerate, said Wednesday that it would acquire most of U.S. Filter Corp. of Palm Desert for $993 million to expand its reach into the growing global water treatment market.

Siemens will pay parent Veolia Environnement of Paris for U.S. Filter’s water, systems and products businesses, which generated $1.1 billion in revenue in 2003, according to U.S. Filter. Munich-based Siemens said the acquisition would more than double its worldwide revenue from water treatment.

Siemens expects the global water treatment industry to have annual growth rates of more than 6%, with the United States and Europe as the two biggest markets.

U.S. Filter has 120 offices worldwide and is a leading provider of municipal and industrial water treatment products and services. The units being sold have about 5,800 employees.

The sale will not be completed until September. A spokesman for U.S. Filter said its current management and headquarters were expected to remain in place.

Some analysts said the sale would allow Veolia to get rid of a money-losing business it inherited from former parent Vivendi Universal. U.S. Filter, analysts said, is a better fit for Siemens, which would become one of the top water treatment companies in the U.S. while that market is undergoing consolidation.

“Water filtration is now a target growth area” for Siemens, said James. N. Kelleher, an analyst for Argus Research. Kelleher follows General Electric Co., which paid $1.8 billion for Hercules Inc.’s industrial water treatment business two years ago.

“I would look for [Siemens] to continue buying assets here,” Kelleher said.

“It’s a market that can’t go anywhere but up,” said Amy Zander, a professor of civil and environmental engineering at Clarkson University in New York.

“As the population grows, we will have a great need for drinkable, clean water,” she said. “Now it’s about taking less-clean water and making it drinkable.”

Zander says U.S. Filter is a leader in one of the most advanced areas of water treatment, which involves the use of polymer membranes, with pores that are a fraction of the diameter of a human hair, to filter out multiple contaminants.

Siemens shares closed down 90 cents at $68.20, while Veolia shares rose 81 cents to $26.48. Both trade on the New York Stock Exchange.