Doosan Robotics withdraws plan to merge with Doosan Bobcat

Courtesy of Doosan Group

Doosan Robotics Inc. withdrew its plan to merge with Doosan Bobcat Inc. and delist the construction equipment company.

The two companies each held board meetings on Thursday, where they decided to cancel the comprehensive stock exchange merger between the two companies. With this cancellation, the plan to make Doosan Bobcat a 100 percent subsidiary of Doosan Robotics and delist it has also been scrapped. But Doosan Group still plans to proceed with a merger between a newly established entity holding Doosan Bobcat shares and Doosan Robotics. With this revision, Doosan Bobcat will remain a subsidiary of Doosan Robotics, effectively separating it from Doosan Enerbility Co. For its part, Doosan Group previously proposed restructuring Doosan Bobcat, a subsidiary of Doosan Enerbility, by merging it with Doosan Robotics.

The initial plan faced backlash over an alleged infringement of minority shareholders‘ rights, and there was dissatisfaction with exchanging shares of Doosan Bobcat, which generates an annual operating profit of about 1 trillion won ($750 million), for shares in Doosan Robotics, a loss-making company. Politicians and financial authorities also opposed the merger.

A Doosan Enerbility official explained that the restructuring aims to reduce Doosan Bobcat’s debt burden and secure investment capacity for Doosan Enerbility’s nuclear power projects, rather than benefiting major shareholders. If it is successful, the restructuring will eliminate Doosan Bobcat’s 700 billion won debt, increasing Doosan Enerbility’s lending capacity.

A variable in the revised plan is the appraisal right. While appraisal rights were removed for Doosan Bobcat shares, they remain in place for Doosan Enerbility and Doosan Robotics shares, and convincing Doosan Enerbility’s shareholders will thus be critical.

Doosan Enerbility and Doosan Robotics plan to submit an amended report reflecting revisions requested by the Financial Supervisory Service. However, due to missing the deadline for the report submission on Thursday, holding the shareholders‘ meeting next month will be challenging. Doosan plans to reschedule the meeting after assessing market sentiment and other factors.