General Electric (GE) - Get Report is continuing to aggressively build its energy business, agreeing Tuesday to acquire the heat recovery steam generator (HRSG) business of Korea's Doosan Engineering and Construction in a deal valued at $250 million.
The unit to be acquired converts water into steam by capturing the exhaust heat from a gas turbine, recycling the heat to produce upwards of 33% more power output at a plant compared to traditional turbines. The purchase complements GE's $13.9 billion purchase of the energy business of Alstom last year, reinforcing the industrial conglomerate's desire to expand its energy business.
"With the Alstom acquisition, we are now offering full power plant solutions and seeing an even greater demand for our highest-efficiency HA heavy-duty gas turbine plants," GE Power CEO Steve Bolze said in a statement. "The Doosan Engineering & Construction HRSG acquisition will help us meet our forecasted growth and better manage costs by increasing our global manufacturing capacity and further complementing our existing HRSG technology."
The GE HA turbine is an improvement over the company's H-class model, incorporating technology borrowed from the conglomerate's aerospace unit to better withstand high internal temperatures and provide improved efficiency when converting natural gas into electricity.
The Doosan business has been a supplier to both GE and Alstom in the past. GE officials said they see opportunities to bring down costs by vertically integrating its turbine offering. The unit GE is acquiring has been in business since 1977, operates a factory in Korea and two in Vietnam, and employs more than 1,400.
Fairfield, Conn.-based General Electric in the years since the 2008 financial crisis has sold more than $160 billion in financial assets as it seeks to scale back its banking business and focus on industrials. Energy and medical devices have been particular areas of interest for expansion by GE.
Jim Cramer, TheStreet's founder, predicted late last month GE would seek to acquire additional assets and suggested GE could also look to acquire oil and gas equipment manufacturer National Oilwell Varco (NOV) - Get Report as part of its push into energy, saying that National Oilwell would benefit from access to GE's Predix cloud software that improves machine performance. GE is a holding of the Actions Alerts PLUS Charitable Trust Portfolio, which Cramer manages.
"National Oilwell Varco could use Predix on its machines so you would know ahead of time when they were ready for service," he said in late April. "So you could see how this $11 billion company, once valued at $33 billion, could be the subject of takeover talk."