GE To Buy HRSG Unit To Boost Power Business, Drive Top Line

GE Power, a division of General Electric Company (NYSE:GE) , recently inked an agreement to acquire Doosan Engineering & Construction’s Heat Recovery Steam Generator (HRSG) business. The acquisition is likely to be worth $250 million.

The HRSG technology is a combined-cycle power plant that captures the exhaust heat from the gas turbine. Water is converted into steam, which in turn is used to drive a steam turbine to produce additional power output. This technology can help generate approximately 33% of the plant’s total power output.

As a business unit of Doosan Engineering & Construction, the acquired business manufactures and distributes HRSGs to combined-cycle power plants worldwide. The division has successfully installed and operated HRSGs not just for Korean power plants in Boryeong, Busan and Incheon, but also for power plants in various continents including Europe, Asia and Africa.

Post acquisition, General Electric will be well positioned to meet the growing demand for combined-cycle power plant solutions, utilizing HRSG technology. This would also enable the company to expand its product portfolio and augment its revenues.

The acquisition of Alstom (PA:ALSO) enabled General Electric to offer full power plant solutions to its customers. The company is currently witnessing huge demand for its H class Air-cooled heavy-duty gas turbine plants. Given the rising demand for HRSG, this acquisition will enable General Electric to serve its customers more efficiently.

Doosan Engineering & Construction HRSG has a history of serving General Electric and Alstom. In fact, it has been a licensee to Alstom. On completion of the deal, Doosan Engineering & Construction HRSG will be a part of GE Power.

General Electric carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space include Honeywell International Inc. (NYSE:HON) , Carlisle Companies Incorporated (NYSE:CSL) and CLARCOR Inc. (NYSE:CLC) . All three carry a Zacks Rank #2 (Buy).