Deutz acquires Blue Star Power Systems Generator Manufacturer

Important step towards becoming a solutions provider DEUTZ taps into the fast-growing energy market in the USA and focuses on new business models

Cologne, Germany- Deutz AG., they signed an agreement to acquire 100 percent of the shares in Blue Star Power Systems Inc., the company, based in North Mankato, Minnesota (USA), develops, produces and sells generator sets (gensets) and manufacturers in the US market.

Deutz's acquisition marks a shift from component manufacturing to providing complete local power generation solutions, leveraging their engines' history in generator sets.

Deutz CEO Dr. Sebastian C. Schulte, said, "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. 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. The Deutz Board of Management looks forward to welcoming the Blue Star Power Systems team once the transaction closes.”

Deutz generates revenue nearly €30 million from decentralized energy supply products and services, led by diesel-powered generator sets. They recently secured their first serial order for generator sets with hydrogen combustion engines from China.

Deutz anticipates Blue Star Power Systems' acquisition to add annual revenue of $100-150 million in the medium term. They aim for their energy segment to reach around €500 million globally by 2030, driven by organic and inorganic growth.

Deutz targets decentralized energy supply growth with a focus on generator sets due to severe weather events, outdated infrastructure meeting rising electricity demand, and fluctuating renewable energy shares. Data centers and microgrids are also key drivers, with the global generator set market projected to reach $34.5 billion by 2030, growing annually by 5.9%.

Dr. Ing. Markus Müller, CTO and CSO of Deutz AG, said “In addition, the acquisition of Blue Star Power Systems offers 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. 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.

Mr. Doug Fahrforth, founder of Blue Star Power Systems, said "We are proud of the business we have built together at 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. 

The parties have agreed not to disclose the purchase price. The valuation is in line with standard market parameters. Completion of the transaction is subject to the usual conditions, in particular the granting of the necessary regulatory approvals, and is expected to take place during the second half of 2024.