Doosan to restructure Bobcat subsidiary under Robotics unit

Doosan Enerbility President Park Sang-hyun speaks about a stake transaction involving Doosan Bobcat during a press conference at the Plaza Hotel in central Seoul, Monday. Yonhap

Doosan Group will resume its efforts to reorganize the governance structure of Doosan Bobcat by approving a new plan to place the profitable construction equipment unit under the control of Doosan Robotics.

According to both companies, Bobcat and its largest shareholder, Doosan Enerbility, held board meetings on Monday and approved a new reorganization plan for Bobcat.

Under the latest plan, Enerbility will split into an existing entity and a new entity that will hold Bobcat’s 46 percent stake. The new entity will be merged into Robotics, making Bobcat a subsidiary.

The new plan came two months after Doosan Group scrapped its initial plan to delist Bobcat and merge it into Robotics. The plan faced significant backlash from investors and policymakers regarding the exchange rates applied for the stock swap deals necessary for its implementation.

Initially, Doosan sought to exchange 100 Enerbility shares with 75.3 Enerbility shares plus 3.15 Robotics shares, and then swap 100 Bobcat shares with 63 Robotics shares. This, however, led to controversies over assigning greater value to the shares of the struggling robotics firm.

Under the new plan, shareholders can exchange 100 Enerbility shares for 88.5 Enerbility shares plus 4.33 Robotics shares. The companies emphasized that this new rate reflects a 43.7 percent premium on Bobcat’s controlling stakes.

“We would like to express our sincere apology for failing to communicate enough with the market over the (initial) reorganizing plan,” Enerbility President Park Sang-hyun said during a press conference on the new plan.

“We have changed the swap rate to provide as many shares as possible to shareholders. Since we expect faster growth of Enerbility and Robotics after the proposed reorganization, shareholders of Enerbility can expect additional benefits by holding more shares of the two companies.”

Park added that the proposed transactions will create an investment potential of 1 trillion won ($726 million) for Enerbility, and the company will promptly invest in large nuclear reactors, small modular reactors (SMRs), and gas turbines.

Park said the company expects orders for at least 10 large nuclear reactors and 60 SMRs in the next five years, which will help the company achieve over 200 billion won in additional operating profit from 2028.

Doosan Bobcat CEO Scott Park, right, discusses a stake transaction involving the company's controlling stake involving Doosan Enerbility and Doosan Robotics during a press conference at the Plaza Hotel in central Seoul, Monday. From left are Doosan Robotics CEO Ryu Jung-hoon, Doosan Enerbility President Park Sang-hyun and Scott Park. Yonhap

Robotics CEO Ryu Jung-hoon stressed that the Bobcat transaction is necessary because the construction equipment manufacturer’s business and network will create synergies with Robotics’ businesses. He expected that the synergies will be valued at 500 billion won by 2030.

Although Monday’s plan will keep Bobcat as a subsidiary of Robotics, it remains uncertain whether Doosan Group will pursue Bobcat’s merger into Robotics as proposed in the previously scrapped plan.

Bobcat CEO Scott Park said, “The merger won’t be possible for the next one year, and we will reconsider the possibility of merger after reflecting on market conditions and shareholder opinions.”

In response to criticism that the reorganization plan would allow Doosan’s owner family to receive larger dividends from Bobcat by leveraging their greater stake in Robotics, the president of Doosan Enerbility stated, “There is no significant difference in the amount of dividends considering the 700 billion won in liabilities that Bobcat currently holds.”

As Doosan Group proposes what it calls “a shareholder friendly plan,” gaining attention is whether the country’s financial authority will approve this. The Financial Supervisory Service (FSS) has ordered Doosan twice to correct its prospectus on the initial merger plan.

“We cannot comment on whether the FSS will approve the new plan, but we believe we have adequately communicated with the FSS and incorporated the authority's demands into the current plan,” Enerbility’s Park said.