Following the merger of ABB and alstom earlier this year, other companies are joining forces. Kvaerner announced on 9 August that it is selling its hydro power activities, part of Kvaerner Energy, to General Electric of the US. While the hydro businesses of Siemens and Voith will be one company from 1 October.
The sale between Kvaerner and GE, which is subject to government clearances, totals US$70M and includes the hydro power activities of Kvaerner Energy in Norway, Sweden, Finland, the UK, the US and Australia. These activities employ 900 people and have annual revenues of US$150M.
‘The development of hydro power technology is an activity with a long and proud history with Kvaerner,’ says Kjell E Almskog, the company’s president and CEO. ‘But as the process of change moves forward, the skills of our employees and the quality of our products can be better utilised in today’s competitive environment by being part of a power generation organisation such as GE,’ he added.
Siemens’ and Voith’s plans to merge and form a partnership known as voith-siemens Hydro, were completed by the signing of agreements on 21 July.
The merged company will have a business volume of around DM1B (US$0.56B). Of this, DM700M (US$39M) comes from Voith and DM350M (US$194M) is from Siemens. Ownership of the joint venture company will reflect this: Voith will hold 65% of the shares and Siemens will hold 35%.
Similarly, the workforce will comprise around 1500 Voith personnel and around 650 Siemens staff. The new com-pany will be based in Heidenheim.
Speaking about the merger, Hans Peter Schiffer, who will chair the managing boards of Voith Siemens Hydro, and who is currently a member of the managing board of Voith, said: ‘With the establishment of Voith Siemens Hydro we are following the global trend towards the provision of complete plant equipment and will thus be able to meet the changing needs of our customers more comprehensively than any other company. Our expertise in providing complete plant equipment and the expansion of our service business, including power plant modernisation, will provide an additional impetus for the growth of our hydro power business and increase its earning power.’ According to Michael Olschewski, head of the Hydro Power Division of Siemens, and a member of the managing board of the new company: ‘The joint venture with Voith will strengthen our hydro power business. Our I&C expertise is an additional competitive edge for our joint venture. The name sends a clear signal to our customers that ours is a long-term commitment to hydro power, for this is the first time that a company in which Siemens is the minority partner includes “Siemens” in its name.’ The two companies point to a long history of co-operation, including joint projects dating back to the last century. They are currently working together on several projects including Sanxia and Guangzhou 2 in China, Gitaru in Kenya, and Lajeado in Brazil. They are also partners in SHEC, a Chinese joint venture with Shanghao Electric.
The joint company will take advantage of the complementary nature of their major products: Voith offers hydro turbines and automation equipment, while Siemens offers generators and electrical and I&C equipment. They also point to a geographical fit which means that jointly they will have engineering and manufacturing facilities in important hydro power markets worldwide.
Following these recent company announcements, observers expect that more companies in the hydroelectric industry will search for partners. The new trend favours companies who not only have large capitalisation and global reach, but who are also able to offer the full range of plant equipment.
In a hydro market where new construction is a rarity, and companies are fighting for a share of the rehabilitation and upgrading markets, more mergers and acquisitions are expected soon.