Deutz to acquire gen-set manufacturer in U.S.

Deutz has signed an agreement to acquire 100% of the shares in Blue Star Power Systems Inc. The company, based in North Mankato, Minn., USA, develops, produces and sells generator sets. Terms were not disclosed.

Deutz said the acquisition is an important step from a component manufacturer to a solutions provider. Its engines have long been used in generator sets, and now the company said it is laying the foundations for offering complete solutions for local power generation.

(Photo: Blue Star Power)

“We are excited that this acquisition will position us in a high-growth market that is less cyclical and in which we have a strong grip on technology and service. We are also gaining access to new, complementary business models,” said Deutz CEO Dr. Sebastian C. Schulte.

“With the acquisition of Blue Star Power Systems, we are accelerating the expansion of our activities in the field of decentralized energy supply, which we entered as part of our Dual+ strategy and are broadening the Deutz business model.” 

Today, Deutz said it generates revenue of almost US $32 million (€30 million) with products and services for decentralized energy supply. Diesel-powered generator sets are the main contributors to this, as is the first serial order for generator sets with hydrogen combustion engines, which the company recently received from China.

Deutz expects the acquisition of Blue Star Power Systems to generate additional profitable revenue of more than US $100 million to more than US $150 million per year in the medium term. Building on this, revenue in the energy segment is expected to grow globally to around €500 million by 2030 through organic and inorganic growth.

Deutz said it is focusing on the growing importance of decentralized energy supply, in which gen-sets play an important role. The main growth drivers are the increase in severe weather events, rising global demand for electricity that is being met by outdated infrastructure and a rapidly growing share of renewable energies that are subject to fluctuations.

The increasing importance of data centers and microgrids is also driving the global market for generator sets, which Deutz said is expected to grow to US $34.5 billion by 2030. This translates into an annual growth rate of 5.9%.

In addition, the acquisition of Blue Star Power Systems is expected to offer a wide range of development and growth opportunities for Deutz.

“The acquisition will help us to advance decentralized energy supply globally with generator sets in rural and less developed areas,” said Dr. Ing. Markus Müller, CTO and CSO of Deutz AG. The Deutz energy segment with Blue Star Power Systems at its core has full access to all products and expertise in the range from diesel engines, eFuels and HVO, through to hydrogen powered engines.”

Blue Star Power Systems, Inc. offers gaseous generator sets ranging from 20 to 1250 kWe designed for prime power as well as emergency applications. 

“We are proud of the business we have built together at Blue Star Power Systems,” said Doug Fahrforth, founder of Blue Star Power Systems. “We look forward to partnering with Deutz to take our business to the next level. Building on our vast product offerings and strong industry relationships will provide global expansion and further development of a sustainable product portfolio.”

Fahrforth will stay on to help lead the business through 2026.

Completion of the transaction is subject to the usual conditions and is expected to take place during the second half of 2024.