Austrian manufacturing equipment maker Andritz reached agreement February 17 to buy VA Tech Hydro, the hydroelectric and power machinery unit of VA Tech, from German engineering conglomerate Siemens.
The head of Siemens’ Austrian unit, Brigitte Ederer, said Andritz won against competing bids from Austrian group Cross Industries and Argentina hydro equipment maker Impsa. She said the final negotiations would be concluded March 13 at the latest, a deadline the European Union (EU) has given Siemens for the sale.
European Union competition authorities ordered Siemens to sell VA Tech Hydro, a maker of generators and turbines for hydropower plants, as a condition for approval of Siemens’ purchase of Austria’s VA Tech last year.
“The acquisition of VA Tech Hydro ideally complements Andritz’s product portfolio,” an Andritz statement said. “Due to its financial strength and proven experience in VA Tech Hydro’s area of activity, Andritz will not only secure, but even increase VA Tech’s competitive position with the existing Andritz business know-how.”
Acquisition to help Andritz deliver complete hydro plants
The acquisition adds about 30 percent to Andritz’s sales and enables it to deliver complete hydropower plants, a growing market as electricity makers try to escape high oil prices, analysts said.
“We believe the hydro business is very promising because of the high crude oil prices,” said Gerald Walek, an analyst at Austria’s Erste Bank. “We expect that Andritz can integrate the business very quickly, based on its track record.”
Ederer declined to comment on a purchase price at a joint news conference with Andritz. Andritz Chief Executive Wolfgang Leitner said only the group did not have to sell new shares to fund the purchase.
“We will not need a capital increase for this acquisition,” Leitner said. “We can finance it out of our own funds.”
Siemens’ previous Austrian CEO had said he expected to raise between 300 million and 500 million euros (US$593 million) in the sale, on which Ederer commented: “It is undisputed that my predecessor was a very ambitious man.”
Deciding factor: Andritz plans for Weiz facility
Siemens had considered three questions when deciding about the sale, Ederer said: the price, the likelihood that the EU would not object to the buyer, and the bidders’ plans for VA Tech Hydro’s plant in Weiz in southern Austria. Andritz’ plans for the Weiz site had been one decisive factor for winning the auction, Ederer said.
An Andritz statement said the competitive ability of the Weiz facility will be secured by extending existing cooperation with an Andritz manufacturing facility in Graz, Austria.
“By doing so, Andritz is confident that a sizable volume can be shifted to the Weiz production site, or compensated by shifting production from other Andritz sites to Weiz, if there is a reduction of contractual production in Weiz,” Andritz said.
Last month, Austrian newspaper Der Standard reported Siemens was negotiating with Cross Industries, Impsa, and Indian conglomerate Tata. At that time, the newspaper said Andritz, Austrian industrialist Mirko Kovats’ A-Tec, and a consortium led by industrialist Hannes Androsch were no longer in the race. Siemens had declined to comment at that time.