Doosan Robotics, Bobcat stock swap called off in face of fierce opposition

Opposition from both shareholders and financial authorities compelled Doosan Group to scrap its stock swap between Bobcat and Robotics.

Production site of Doosan Robotics in Suwon, Gyeonggi [DOOSAN GROUP]

Doosan Group scrapped its plan to make Doosan Bobcat a wholly-owned subsidiary of Doosan Robotics in the face of strong opposition from financial authorities and minority shareholders.

The previously announced spin-off to merge Doosan Bobcat and Doosan Robotics, however, will proceed. This means that while Doosan Bobcat will not be delisted from the Kospi bourse, the construction equipment supplier will still be spun off from Doosan Enerbility as planned and become a partial subsidiary of Doosan Robotics.

The boards of directors at Doosan Bobcat and Doosan Robotics on Thursday decided to terminate a share swap agreement, which was part of a group-wide plan to shake up its corporate government structure, according to the companies’ regulatory filing.

The decision came after the Financial Supervisory Service demanded a second revision in the securities filings submitted by the companies on Sunday, calling for further information to justify their valuation and swap ratio, which was criticized for unfairly favoring Doosan Robotics.

“Even when we expected that the corporate governance reform plan would lead to a positive result, it cannot proceed without sufficient support from shareholders and the market,” said Doosan Enerbility Chief Financial Officer Park Sang-hyun in a shareholder letter issued on Thursday.

However, Park stressed that “the governance reform will be a good solution to secure funding for further growth,” stating that the Bobcat spin-off will reduce Doosan Enerbility’s debt by 700 billion won ($52.5 million), enhancing its borrowing power.

In its initial announcement on July 11, Doosan outlined its plan to merge Doosan Bobcat with Doosan Robotics, a much smaller robot developer. According to the proposal, a new investment entity would be spun off from Doosan Enerbility, which is currently the largest shareholder of Doosan Bobcat at 46 percent. The new entity would then merge with Doosan Robotics.

Originally, Doosan Bobcat was to be delisted and become a wholly owned subsidiary of the upcoming spinoff, with minority shareholders’ 54 percent stake in Doosan Bobcat to be swapped with new shares issued by Doosan Robotics at a swap ratio of 0.63 to 1. However, with the latest decision to terminate the share swap agreement, Doosan Bobcat will remain trading on the bourse.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]