Austria’s VA Technologie (va-tech) is to acquire the hydropower division of Sulzer of Switzerland.

VA Tech said the deal was in the best interests of both companies, particularly because of the trend towards consolidation of hydroelectric and other power plants. The deal, which is subject to regulatory approval, puts VA Tech second only to world market leader ABB-alstom and ahead of Siemens-Voith and General Electric (which recently acquired Kvaerner’s hydro business). The four groups dominate three-quarters of the world market (see p13).

The acquisition of Sulzer is the third in a string of major purchases by VA Tech. It recently acquired the water technology divisions of the UK’s Rolls Royce and Germany’s Babcock.

In 1998 the Austrian group had a total turnover of US$3.2B, US$1.2B of which was in its core business of energy and environmental technology, with around 6,000 employees. Sulzer’s turnover from the supply of mechanical equipment and refurbishment and maintenance in the hydroelectric industry amounted to US$227M in 1998. It employs around 1,650 people worldwide and has production facilities in Switzerland, Germany, Italy, Spain, North America, Mexico, Peru, India and China.

First reactions to the acquisition were favourable. Analyst Ralf Burchert of Austria’s Erste Bank said the deal was a positive step towards development of VA Tech’s energy market, bearing in mind the changes in the market and Sulzer’s activities in service and maintenance. ‘Sulzer hydro seems to be a good supplement for VA Tech , as supply companies tend to let out more service and maintenance as a result of liberalisation of the electricity market,’ he said.

Most maintenance work is considered likely to arise within the developed world, with contracts for new hydro power plants being concentrated in Asia and South America.