Hydro mergers signal industry consolidation
In deals that signal further consolidation in the global power industry, GE Hydro agreed to acquire the hydropower turbine business of Kvaerner, while Siemens AG and Voith formed a hydropower joint venture. Both deals are expected to be complete by the end of 1999.
GE Hydro, the hydro division of GE Power Systems, will pay $70.5m for the hydro unit of the Anglo-Norwegian engineering concern. No payments will be made under the Voith-Siemens merger, but Siemens will be the minority partner with 35 per cent of the joint venture company, reflecting the value of capital it will bring.
GE`s acquisition will give it access to a segment of the market that it does not currently serve – pump, pelton and small hydropower projects. This sector is growing, and GE believes that it will be able to double its sales as a result. Kvaerner will also provide GE with additional technology, including control equipment.
Voith and Siemens will merge their businesses into a new joint venture company, Voith Siemens Hydro. It will have a work force of 2200 and a turnover of over DM1bn ($540.5m). The two companies are a good match, with Voith`s expertise in hydropower turbines and automation equipment complementing Siemens` generator, electrical and I&C equipment.
Voith Siemens Hydro will offer a full range of equipment up to 750 MW and electrical and control equipment.