Doosan buys Skoda Power

Doosan Heavy Industries & Construction has signed an agreement to buy Czech power plant equipment maker Skoda Power. The transaction is expected to be completed by the fourth quarter of 2009.

Founded 150 years ago in 1859 as a foundry and engineering works, Skoda has supplied more than 450 steam turbines to utilities in 62 countries worldwide since it began turbine production in 1904.

With this acquisition, Doosan now has core technologies for boilers, turbines and generators - the three key components of modern fossil-fuel power plants. This now positions the company in the same league as GE of the US, Siemens of Germany and Alstom of France.

The acquisition also makes it possible for Doosan to expand its presence in the retrofit and other power plant service markets, giving the company the ability to compete with the global industry leaders across the entire power generation value chain.

The first benefit the acquisition brings is that Doosan is now able to build and supply turbines for engineering, procurement, construction (EPC) projects rather than purchasing from third-party suppliers.

Another is that Doosan will have a full boiler-turbine-generator (BTG) line-up, allowing it to pursue more profitable BTG package orders, a market segment open only to the top industry players. The company expects this ability to supply its own turbines to improve foreign exchange earnings by 30 per cent to 40 per cent on future BTG projects.

The acquisition will give Doosan access to the 50Hz steam-turbine market, a segment that currently accounts for roughly 80 per cent of the global market.

Commenting on the deal, president and chief executive Geewon Park said, 'We expect the synergies of the Skoda Power acquisition to generate an additional $4.26bn in annual revenue in 2020. In the coming years, Skoda Power and Doosan Babcock Energy will spearhead our progressive expansion in Europe, the US and other developed markets.'

Doosan plans to set up Doosan Power Systems to oversee Skoda Power and Doosan Babcock as well as its power solutions business in Europe and the Americas.