DEUTZ (DEZ) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition of Blue Star Power Systems, a leading North American genset manufacturer, aligns with the DualPlus strategy and marks a shift from component manufacturing to providing complete solutions for decentralized energy supply, expanding into high-growth, less cyclical markets.

• Expands access to decentralized energy supply, microgrids, and backup power solutions, supporting ambitions to scale the energy business to EUR 500 million in revenue by 2030.

• Blue Star’s strong position in gensets for microgrids and data centers complements existing capabilities and opens new growth vectors, including green and hybrid technologies.

• Strengthens US business, leverages technology and service know-how, and provides a platform for global expansion and innovation in renewable and hybrid genset technologies.

Financial terms and conditions

• 100% of Blue Star Power Systems shares acquired; transaction signed, with closing expected in the second half of 2024, pending regulatory approvals.

• Valuation is within usual market parameters, with multiples at the lower end of the 6–15x EBITDA range; purchase price not disclosed.

• Blue Star’s 2024 revenue expected above $100 million, with EBITDA margin in the low double-digit range and potential to reach $150 million in the medium term.

• Financing will not significantly impact the equity ratio, which will remain well above 40%.

Synergies and expected cost savings

• Anticipated synergies in sales, distribution, and customer access, with opportunities for economies of scale, vertical integration, and leveraging service networks.

• Potential to introduce DEUTZ engines into Blue Star’s product lines and expand service and aftermarket offerings, especially in regions with less dense distribution.

• Integration of Blue Star’s product offerings and industry relationships to drive global expansion and revenue growth in the energy segment.