Controversial Merger Plan Withdrawn: What’s Next for Doosan Bobcat?

Doosan Group has withdrawn its plan for a merger between Doosan Bobcat and Doosan Robotics through a “comprehensive stock exchange” method.

Doosan Group has withdrawn its plan for a merger between Doosan Bobcat and Doosan Robotics through a “comprehensive stock exchange” method. This decision follows objections from the Financial Supervisory Service, which labeled the merger as a case of “management for the benefit of controlling shareholders,” and significant backlash from shareholders. However, the merger between Doosan Enerbelity and Doosan Robotics is still set to proceed. Here’s an overview of the three key companies involved:

- Doosan Enerbelity: Better known as Doosan Heavy Industries & Construction, it changed its name in 2022. The company operates in a broad range of energy sectors including nuclear power, power plants, and gas turbines.

- Doosan Bobcat: Acquired by Doosan Group in 2007, this American company specializes in compact construction and agricultural equipment. Doosan Bobcat holds a high market share in North America and Europe and generates an annual operating profit of around 1 trillion won, making it a ‘cash cow’ for the group. It has been a core subsidiary of Doosan Enerbelity.

- Doosan Robotics: Founded by Doosan Group in 2015 to enter the robotics field, this company produces collaborative robots designed to work alongside humans. As a new business, it currently lacks significant revenue.

Impact on Shareholders of Enerbelity and Bobcat

Doosan Group planned to detach Doosan Bobcat from Doosan Enerbelity and merge it into Doosan Robotics as a 100% subsidiary, aiming to use the funds for capital expenditures in the robotics sector. This move would lead to the delisting of Doosan Bobcat, potentially devaluing existing shares and causing substantial backlash from shareholders. The value of Doosan Enerbelity’s stock could also be negatively affected, as it would lose its key subsidiary responsible for 95% of its operating profit. Although the comprehensive stock exchange method has been withdrawn, the plan to separate Doosan Bobcat from Doosan Enerbelity and make it a subsidiary of Doosan Robotics is still in progress.

🏙️ Doosan Group’s decision to abandon the “comprehensive stock exchange” method, despite pressure from the Financial Supervisory Service, indicates that they anticipated strong opposition from major shareholders such as the National Pension Service, which holds 6.94% of Doosan Enerbelity and 6.49% of Doosan Bobcat. The fragile governance structures of domestic companies remain a significant vulnerability for the KOSPI and KOSDAQ markets, placing a heavy responsibility on the National Pension Service.