HD Supply (Nasdaq: HDS) has agreed to sell its waterworks products distribution business to Clayton Dubilier & Rice for $2.5 billion. Goldman Sachs managed the sell-side process.

• Why it's a big deal: This business could become a significant beneficiary of a boost in federal and municipal infrastructure spending, as it distributes around 23,000 products for underground water, wastewater and drainage projects.
• Coming attractions: U.S. waterworks distribution is a $13 billion industry, but it's highly fragmented. So expect CD&R to use this as a platform to make smaller, tuck-in acquisitions.
• LBO once-removed: HD Supply put its waterworks unit on the block, in part, to reduce a debt load that can be traced back to its $8.5 billion carve-out from Home Depot back in 2007. Among the private equity sponsors on that earlier deal? Clayton, Dubilier & Rice.