Gas cap maker wins $4B in merger with gas turbine maker
Gas turbine makers are bracing for the next round of consolidation in the industry.
A combination between two companies with a history of price wars and a desire to make more money has become the latest example of the industry’s evolving landscape.
“I think this is a great time for gas turbine manufacturers,” said Mark Sirota, executive vice president of the U.S. Association of Gas Turbines, the trade group for gas turbines.
“There’s going to be a lot of consolidation going on.”
“We have been fighting for gas,” said Paul Stiles, the CEO of the New York-based National Association of Turbine Machinists.
“I think we’re going to see a lot more consolidation.”
The National Association for Gas Turbs, which represents more than 400 companies in the gas turbine industry, said the merger would increase the number of companies competing in the market by nearly 50 percent.
But that doesn’t mean the industry will be going into total turmoil, Stiles said.
“The market is still pretty healthy,” he said.
New York state’s Department of Consumer Protection is investigating the merger because of possible antitrust violations, spokesman Paul Satterberg said.
The department is still reviewing the proposed merger and will decide whether to take any action, Satterberger said.
The state is considering an injunction against the merger.
New York state law says the Department of Health and Mental Hygiene has the power to prevent a merger unless the state decides that the proposed transaction is “unjustifiable.”
If the state doesn’t act, the merger will go forward.
The state has been criticized for trying to protect consumers and consumers have lost trust in gas turbine makers, said John Glynn, executive director of the Gas Turf Association of New York.
“I don’t think there’s any question that there are significant concerns about the safety of the gas turbines and the gas industry, and the public’s trust in them,” he told ABC News.
Glynn said consumers are more likely to buy gas turbines if they have good quality equipment and they’re more likely than gas turbine companies to offer competitive prices.
“You’ll get a lot better quality gas at gas turbines than you’ll get at gas stations,” he added.
Sirota said that the merger could benefit gas turbine producers who can’t afford to fight the government for regulatory approval of their own businesses.
“We believe we can help our competitors in the marketplace by getting a new company in there, or we can get a new group in there,” Sirotsa said.
Gas turbine manufacturers say they’ve been competing with each other since the mid-1990s, but there have been few competitive deals in recent years.
A merger between the two companies is the latest sign of a shift in the competitive landscape for the industry, which is already struggling to compete with renewable energy.
In 2011, the National Association announced that it was buying out two other companies, a wind turbine maker and a gas turbine manufacturer, in a deal that would create a gas-fuelled electricity generation company.
That deal was struck amid a nationwide surge in natural gas prices.
Gas turbine manufacturers have struggled to gain market share, and even in recent months have seen their prices slide.
A report from the New America Foundation last year found that the price of gas turbines has fallen by almost a third since 2009.