The urgent importance of heat pump For the German economy was highlighted this week as the sale of a family-owned heater maker to a US company prompted a review by the government in Berlin.
Carrier Global Corp. said on Tuesday that it had agreed to pay 12 billion euros, or about $13.3 billion, to acquire a unit of Viessmann Group, based north of Frankfurt, that makes heat pumps. The company says the cash-and-stock deal will allow Carrier to expand in Europe and take advantage of the continent’s ongoing green energy transition.
It also comes days after Berlin announced a ban on new fossil fuel-fired furnaces, starting next year.
“Climate change, sustainability requirements and geopolitical factors are driving an unprecedented energy transition in Europe,” said David Gitlin, Carrier’s chief executive officer, as agreement announcement. “Driven by government regulations and incentives, the transition creates significant, long-term growth opportunities.”
Viessmann, the leading European manufacturer of heat pumps and related technologies, is considered one of the German small and medium-sized manufacturers, known as the Mittelstand company, specializing in the production of suitable industrial products fit. Many of them are family-owned, and Viessmann’s decision to sell to a foreign manufacturer is a rare move that raises questions in Germany.
Robert Habeck, Germany’s economy minister, said on Wednesday that his ministry would review the deal, calling the measure routine for any acquisition of comparable size. But the review has raised questions among Germans, given that such recent reviews are related to Chinese company sought to buy shares in German companies and focused on security matters.
Under German regulations, investments by a foreign company that want to buy more than 25% of the shares will subject the German government to reconsideration. They are decided on a case-by-case basis. The country’s legal rules on foreign company takeovers were tightened in 2017, after Chinese companies sought to invest in the country. German technology firms voiced their objections from Washington.
Mr. Habeck dismissed suggestions over security concerns, but he stressed the importance of ensuring that Germany remains competitive in the renewable energy sector, which the government considers a factor. key to economic growth. Germany has avoided a recession in recent months, but it forecasts its economy to grow by just 0.4 percent this year.
High energy prices, due to Russia’s war against Ukraine and the ensuing dispute over natural gas, have hampered growth. They have pushed Berlin to accelerate its transition to renewable energy through new regulation and a series of economic incentives.
Last week, the German government passed a bill that largely bans the installation of new gas and oil heating systems in homes across the country. The legislation still has to pass Congress. About a dozen other countries across Europe are planning similar or already existing regulations.
Heat pumps, powered by electricity, are considered a key element in the energy transition carried out by the government in Berlin. Half of all homes in Germany are heated by natural gas burners, a fuel promoted by the government for decades as an abundant, affordable and relatively clean fuel.
That thing changed last year, when Russia began withholding natural gas flows in response to European sanctions punishing Moscow for invading Ukraine.
Under the terms of the deal, Viessmann will have a seat on Carrier’s board of directors. It would also require Carrier to maintain the heating unit’s headquarters in Allendorf, for at least the next decade, while the research and development sites must remain for at least five years.
The company said other Viessmann divisions, including cooling and deep technology manufacturing, will not be affected by the acquisition and will continue to operate.
“It is important that the benefits of our energy policy and the profits it generates continue to benefit Germany as a place of business,” Mr. Habeck told reporters.
Heat pumps are popular in most of Europe, including Scandinavia, France and Italy, and Carrier estimates the market is expected to triple over the next four years. The German government’s proposal to ban fossil fuel burners, which has met with some opposition in Parliament but is expected to pass, will continue to support growth.
Viessmann is one of a number of European heat pump manufacturers, but Chinese manufacturers have been expanding their sales in the region, creating concern that they might dominate the market by undervalue local competitors.
Viessmann and Carrier argue that German-designed heat pump technology could be produced more widely, making equipment more affordable and therefore more competitive on a broader scale.
“The world’s energy transition can only be successfully managed if the companies are successful,” said Max Viessmann, chief executive officer of the company founded by his grandfather in 1917 in his garage. companies think, act, and collaborate on a global level.
