Private equity firm Clayton, Dubilier & Rice has agreed to acquire the Waterworks business unit of North American industrial distributor HD Supply for $2.5 billion.

Headquartered in St. Louis, Missouri, Waterworks distributes industrial and construction products used for building and maintaining infrastructure networks related to underground water, wastewater and drainage.

It is considered to be the largest distributor of water, sewer, storm and fire protection products in the U.S., and has a network of 244 branches across 46 states. Post acquisition, it will continue to operate from its existing headquarters.

One of the partners in CD&R, Jim Berges, who was also a former chairman of HD Supply, has been named as the chairman of Waterworks. Steve LeClair, president of Waterworks, has been made CEO.

According to HD Supply chairman, president & CEO Joe DeAngelo, divesting the Waterworks business is in the best interests of HD’s stakeholders and also for the employees of Waterworks.

DeAngelo added: "This significant strategic transaction will further simplify and focus HD Supply on our highest value creation opportunities, accelerate debt reduction, create additional cash to enable next generation growth investments and innovation as well as return cash to HD Supply stockholders."

Subject to customary regulatory approvals, the acquisition is likely to be completed in the third fiscal quarter of HD Supply's fiscal year.