The chief executive officers of Doosan Group’s three major affiliates on Aug. 4 issued a letter to persuade shareholders as the group’s restructuring plan, centered on merging Doosan Bobcat and Doosan Robotics, faces backlash. This move comes amid growing controversy over the merger ratio and a warning from the Financial Supervisory Service (FSS). With stock prices falling below the exercise price for appraisal rights, the merger could be jeopardized if they do not recover before next month’s shareholders’ meeting.
Doosan Group on July 11 announced a restructuring plan focusing on clean energy, smart machines, and advanced materials. The plan involves splitting Doosan Bobcat, a construction equipment company under Doosan Enerbility, and merging it with Doosan Robotics. The announcement upset Enerbility shareholders, who would lose Bobcat’s substantial annual profit, and Bobcat shareholders, who are dissatisfied with receiving only 0.63 shares of Doosan Robotics per Doosan Bobcat share. The CEOs of three Doosan affiliates stepped in to clarify their vision for the future as the FSS demanded corrections to Doosan Robotics’ securities report and the National Assembly proposed an amendment to the Financial Investment Services and Capital Markets Act, known as the “Doosan Bobcat Prevention Act.”
Doosan Enerbility CEO Park Sang-hyun on Aug. 4 said, “We plan to invest the 1 trillion won secured through the restructuring into the nuclear power business.” He explained that the restructuring would eliminate Doosan Bobcat’s 700 billion won debt, create borrowing capacity, and generate 500 billion won in cash by selling non-operating assets to Doosan Corporation. Addressing concerns over the loss of the annual 70 billion won dividend from Doosan Bobcat, he said, “Dividends fluctuate annually and are insufficient for necessary funding. Investing 1 trillion won in future growth drivers will yield much higher returns.”
Park also revealed a goal, saying, “Following the selection of the Czech Republic as the preferred bidder last month, we expect new nuclear orders from Poland, the UAE, Saudi Arabia, and the U.K., aiming for about ten orders, including at least two from the Czech Republic, over the next five years,” emphasizing the urgency of timely expansion.
Doosan Bobcat CEO Scott Park mentioned, “The integration with Doosan Robotics will create significant synergies for the unmanned and robotic transformation of construction equipment,” citing Caterpillar’s acquisition of Marble Robot in 2020 as an example. Doosan Robotics CEO Ryu Jung-hoon noted, “Post-integration, our sales could exceed 1 trillion won within five years.”
Doosan Enerbility, with 30% owned by Doosan Corporation and 63.4% by minority shareholders, is highly influenced by the latter. The current stock price (17,690 won) is below the set exercise price for appraisal rights (20,890 won), which could lead to a significant number of appraisal rights being exercised. If this number exceeds the 600 billion won Doosan Enerbility has prepared, the merger may be nullified.
Doosan Bobcat also faces opposition from its shareholders. Doosan Enerbility owns 46% of Bobcat, while foreign investors (39%) and the National Pension Service (7%) hold the rest. Doosan Bobcat shareholders are upset about receiving only 0.63 shares of Doosan Robotics per share of Bobcat, arguing that their interests as investors in a strong stock were overlooked amid the soaring prices of Doosan Robotics, a popular robotics stock. Although Doosan Robotics is the leading collaborative robot company in South Korea with high future value, it reported a loss of 19.2 billion won on sales of 53 billion won last year.
