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WEG buys Watt Drive and Converteam’s machinery business

11 November, 2011

The Brazilian motors and controls manufacturer WEG has made two strategic acquisitions. The first is the Austrian gearbox, gearmotors, drives and controls manufacturer, Watt Drive. The second is Converteam’s Electric Machinery operation. WEG has also formed a gearbox joint venture with another Brazilian company, Cestari, marking its first move into the mechanical power transmission sector.

Watt Drive, based near Vienna, employs about 240 people and is expected to generate revenues worth €30m this year. As well as manufacturing in Austria, it has assembly operations in Germany and Singapore.

WEG says that the acquisition will enhance its product portfolio and reinforce its presence in the power transmission market.

“The market has been demanding power transmission solutions that integrate electric motors, frequency inverters and gearboxes,” explains WEG Motors’ managing director, Siegfried Kreutzfeld (above). “Our strategy is to offer a complete portfolio of products and solutions. In doing so, we become more flexible to supply our customers’ needs and expand the company business.”

Watt Drive’s general manager, Hans Wustinger, says that the WEG deal is “important milestone” for his company, and will give it access to new markets. Watt Drives’ headquarters, technology centre and production will stay in Austria, where further investment is planned.

WEG’s acquisition of Converteam’s Electric Machinery (EM) business follows General Electric’s $3.2bn purchase of Converteam in September. As part of the merger review process before the acquisition, GE agreed with the US Department of Justice to divest the EM business.

Electric Machinery, founded in 1891 and based in Minneapolis, custom designs and manufactures motors, generators and brushless exciters, mainly for the oil and gas, and power generation industries. It is a leader in the development of high value-added products, such as slow-speed synchronous motors and two-pole turbo generators. EM also provides aftermarket services including installation, field support, parts, repairs,  stator rewinds, high-speed balancing and technical support. Its revenues for 2011 are expected to be worth $56m.

"We are very excited with this acquisition,” says WEG CEO, Harry Schmelzer (above). “EM has 100 years of history in large machines, a strong reputation for high-quality products and a great brand recognition in key market segments.

“From a global perspective, this acquisition complements WEG’s offering, with state-of-the-art products and technology,” he adds. “In addition, our production platform in North America now combines the EM plant in Minneapolis with our plants in Mexico, allowing us unsurpassed flexibility to provide integrated solutions in the region.”

In the third deal, WEG has established joint venture with the Brazilian power transmission manufacturer Cestari Industrial to develop, manufacture and distribute gearboxes and gearmotors. The business is expected to generate revenues of approximately R$70m ($39.3m) in 2011.

WEG will have a 50%-plus-one-share stake in the joint venture, which is based on Cestari’s gearbox and gearmotor manufacturing assets in Sao Paulo state (above). Cestari is one of the biggest players in the Brazilian gearboxes and gearmotors market. Its vertically integrated production capabilities including iron, bronze and aluminium casting facilities.

The joint venture will integrate electric motors and automation systems supplied by WEG with gearboxes and gearmotors made by Cestari.

“Considering Cestari’s traditional operation and brand recognition, we believe that this joint venture will significantly contribute to WEG’s growth in the power transmission business,” says Siegfried Kreutzfeld. “Our strategy of offering complete solutions becomes much stronger with the addition of a wide and flexible product line that includes both electrical and mechanical solutions.”

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