Highstar won a Credit Suisse Group and Barclays plc-run auction for Veolia ES Solid Waste Inc., reportedly beating Madison Dearborn Partners LLC and Brazilian conglomerate Estre Ambiental SA. Through its Star Atlantic Waste Holdings III LP holding company, Highstar will pay about 17.2 times the target's $110 million of operating income for 2011.

The sale is the second significant divestment for Veolia in less than a month as CEO Antoine Frérot pursues a plan to cut debt to less than €12 billion ($14.7 billion) by offloading about €5 billion of assets by 2013. Veolia divested its U.K. regulated water business at the end of June to a joint venture of Britain's Prudential plc and Morgan Stanley Infrastructure Partners for £1.24 billion ($1.94 billion). That deal valued the water utility at about 16.5 times operating income.

"The transformation of Veolia is progressing as planned," Frérot said in a statement. Cash from the sale of the U.S. waste unit will allow Veolia to pay down about €1.49 billion of loans, the company said.

The asset disposals are the centerpiece of Frérot's plans to return Veolia to profitability after it posted a net loss of €490 million in 2011. The strategy, under which Veolia plans to exit about half of the 77 countries in which it operates, prompted a failed boardroom coup in February, when Frérot's predecessor and former mentor Henri Proglio attempted to oust him.

Highstar, which was founded by its managing partner Christopher Lee, will more than double the size of its existing waste utility operations with the addition of the Veolia unit to portfolio companies Advanced Disposal Services Inc. and Interstate Waste Services Inc.

The combination of the three units, which will operate as Advanced Disposal Services, will be the largest privately owned waste company in the U.S. and will take in revenue of about $1.4 billion from 20 states. Veolia ES Solid Waste had revenue of $818 million in 2011.

"The acquisition of Veolia ES Solid Waste Inc. is a unique opportunity to create a fully integrated environmental services platform across the eastern United States," Lee said in a statement.

The deal is subject to regulatory approval and is expected to close in the fall.

Veolia shares traded Thursday morning at €9.28, up less than 1% on their previous close.

Star Atlantic raised debt for the deal from Deutsche Bank AG, Macquarie Group Ltd. and UBS. Veolia was advised by a Barclays team including Mark Hudson, George Murphy and Sébastien Jossart. Deutsche Bank acted as lead financial adviser to Highstar Capital and Star Atlantic, which also took advice from Macquarie. Highstar took legal advice from Winston & Strawn LLP.