Doosan Acquires Skoda Power

The deal makes Doosan a leading global power plant solution provider

Doosan Heavy Industries & Construction has signed an agreement to buy Czech power plant equipment maker Skoda Power, which will provide the rights to proprietary turbine technologies used in power plants.
Doosan and Skoda Holding agreed on the acquisition in Prague, Czech Republic, on Sept. 14. The deal, which gives Doosan a 100-percent stake in Skoda Power, is expected to be completed by the fourth quarter of 2009.
The acquisition will secure proprietary turbine technologies for Doosan, completing the company’s lineup of power generation equipment.
Founded 150 years ago in 1859 as a foundry and engineering works, Skoda is one of the Czech Republic’s oldest and most respected business groups. Its flagship power equipment subsidiary Skoda Power is one of only a handful of firms worldwide to possess propriety technologies in the steam turbine field. It has supplied more than 350 turbines to utilities in 62 countries worldwide since it began turbine production in 1904.
With the acquisition, Doosan now has the core technologies for boilers, turbines and generators ― the three key components of modern fossil fuel power plants. This will position the company to join such global leaders as GE of the United States, Siemens of Germany and Alstom of France at the top of the industry in the coming years.
The deal also makes it possible for Doosan to expand its presence in the retrofitting and other profitable power plant service markets, giving the company the ability to compete with global industry leaders across the entire power generation value chain.
Turbines are considered the most technically advanced pieces of equipment in the power generation field. Manufacturers with proprietary technologies in the turbine field have a significant competitive advantage over those who do not. Doosan expects the access to proprietary turbine technologies to dramatically improve its competitiveness in the power plant business as well as significantly expand business opportunities.
The first benefit of the acquisition is that Doosan is now able to build and supply turbines for engineering, procurement and construction (EPC) projects rather than purchasing them from third-party suppliers.
Another benefit is that Doosan will have a full boiler-turbine-generator (BTG) lineup, allowing it to purchase more profitable BTG package orders, a market segment open only to the top industry players. The company expects the ability to supply its own turbines to improve foreign exchange earnings by 30 percent to 40 percent on future BTG projects.
In addition to technology, Skoda Power is a natural fit for Doosan in terms of business portfolio and market reach, factors the company expects to use to produce major synergies in the coming years.
The acquisition will give Doosan access to the 50 Hz steam turbine market, a segment that currently accounts for roughly 80 percent of the global market. In addition to major power generation markets in Europe and the United States that were previously very difficult to enter without proprietary technologies, it opens the door to opportunities in every market around the globe.
Commenting on the deal, President and CEO Park Ge-won said, “We expect the synergies of the Skoda Power acquisition to generate an additional $4.26 billion in annual revenues in 2020. In the coming years, Skoda Power and Doosan Babcock Energy will spearhead our progressive expansion in Europe, the United States and other developed markets.
Doosan plans to set up Doosan Power Systems to oversee Skoda Power, Doosan Babcock and its power solution businesses in Europe and the Americas as it lays the groundwork for its full-scale advance into those markets. nw

Doosan Heavy Industries & Construction signed a deal to purchase Czech power plant equipment maker Skoda Power in Prague on Sept. 14.