MUNICH, Sept 23 (Reuters) - German automotive and

industrial supplier Norma will sell its lucrative

water management business to U.S. rival Advanced Drainage

Systems ( WMS ) in a deal valued at $1 billion, the companies

said on Tuesday.

As a result of the deal, Norma is set to lose roughly a

quarter of its forecast revenue this year as it works towards

becoming a more focused industrial supplier.

Shares in Norma opened 4% higher on Tuesday after the

announcement of the deal. However, they reversed course and were

trading 3.8% lower at around 0800 GMT.

The company built up the irrigation and drainage technology

business in recent years through acquisitions, with 90% of the

division's revenue coming from the United States and customers

mainly from the agricultural sector.

Norma expects a net cash inflow in a range of 620 million to

640 million euros ($731 million to $755 million) from the sale.

It plans to use 300 million euros of the proceeds to repay

debt and to set aside up to 70 million for potential

acquisitions in the industry applications business.

"The management board plans to return the remaining portion

of the net cash inflow to shareholders," Norma said in a

statement, potentially through a share buyback programme

initially.

The deal, which Advanced Drainage Systems ( WMS ) said it would fund

with cash reserves and existing credit line capacity, is set to

close in the first quarter of 2026.

Norma will however remove the water management business from

its financial reporting before then, from October, and revised

down its full-year guidance on Tuesday accordingly.

Norma expects sales from continuing operations to be in the

range of 810 million to 830 million euros this year. Its

previous guidance including the water management business had

been for 1.1 billion to 1.2 billion.

The company also lowered its forecast range for adjusted

EBIT margin from continuing operations to no more than around

1%, from a previous forecast of 6%-8%.

($1 = 0.8477 euros)

(Additional reporting by Ruchika Khanna in Bengaluru; Writing

by Rachel More; Editing by Miranda Murray and Barbara Lewis)