Vivendi will have 10% of the water market in England and Wales
Vivendi Environnement, an arm of the media giant, is buying the company in a deal which values Southern Water at £2.05bn.
The company is being sold by First Aqua - the holding company which bought Southern Water from energy firm Scottish Power in March.
The deal, which still requires regulatory approval, would give the French firm a 10% share of the water market in England and Wales.
Southern Water, which supplies one million homes in south-east England, was put up for sale last year as part of Scottish Power's decision to focus on the energy sector.
Foreign ownership
Vivendi Environnement, which also owns the Connex transport group, currently has a small presence in the UK water sector through the supply businesses Three Valleys Water, Folkestone and Dover Water, and Tendring Hundred Water Services.
It is one of a number of foreign companies to own UK power or water utilities, with the latest deal leaving nine out of 24 water suppliers under overseas ownership.
Scottish Power bought Southern Water in 1996 but the company became less attractive because of strict controls on charges.
Vivendi had expressed interest at the time of the sale, and the deal with First Aqua was widely expected.
Vivendi, whose core business is media, has been struggling recently, having posted a loss of 17bn euros (£10.5bn; $15.5bn)in the first three months of the year.
During 2001, Vivendi racked up a loss of 13.6bn euro (£8.4bn; $12.4bn), the biggest in French corporate history, due to write-downs on assets acquired at the height of the technology and media boom.