Doosan Robotics is expected to complete its merger with Doosan Bobcat by early next year, with Doosan Group ready to invest billions of dollars in the deal to ensure Bobcat plays an active role in Doosan Group’s business expansion through mergers and acquisitions.
Doosan Group said on Sunday that Doosan Robotics will acquire Bobcat as a wholly owned subsidiary to smooth the merger process regarding contracts with creditor banks and administrative procedures ahead of the two companies’ merger.
The restructuring will likely free Bobcat from fair trade restrictions, which require it, as a sub-subsidiary of holding company Doosan Corp, to acquire 100% of any company it wants to acquire.
Earlier this month, Doosan Corp. announced that Doosan Robotics would acquire 100% of Bobcat shares from Doosan Enability Co., a power plant engineering company and intermediate holding company of the Doosan Group, through a tender offer.
Doosan Bobcat All-Electric Skid Steer Loader
Construction-equipment maker Bobcat is the conglomerate’s cash cow: It had about 1.8 trillion won ($1.3 billion) in cash and cash equivalents as of the end of March. It expects operating profit to reach 1.39 trillion won in 2023.
Doosan Robotics, one of the world’s leading collaborative robot makers, has about 380 billion won in cash.
Bobcat has never pursued M&A or joint venture transactions due to fair trade regulations that require it to own 100% of the shares of any company it acquires.
Enability, Bobcat’s largest shareholder with a 46% stake, is not in a position to explore M&A due to accumulated losses from the previous administration’s nuclear phase-out plan.
“Construction machinery makers are trying their best to incorporate autonomous driving and artificial intelligence (AI) technologies into their products, but Doosan Bobcat seems to have hit a dead end,” said an industry insider.
“If the merger with Doosan Robotics goes through, we will be able to expand into various fields,” he added.
Bobcat has 3.3% of the global construction equipment market, ranging from mini excavators to tractors, forklifts and skid steer loaders. In 2007, Doosan Group acquired Bobcat for $4.9 billion, the largest acquisition by a Korean company at the time.
Bobcat will relocate to Doosan Group’s new headquarters in Bundang, Gyeonggi Province.
For Doosan Robotics, the merger will enable it to expand its global sales network by leveraging Bobcat’s 1,500 global dealers around the world.
Naming the collaborative robot “Bobcat” will also help increase brand awareness.
“It will create synergies on a par with those of Doosan Bobcat Korea. In 2020, three years after changing the brand name to Bobcat, sales rose from 800 billion won to 1.7 trillion won,” the official said.
Concurrent with the restructuring, Enability will be split into two companies: a going concern and a new investment company that will hold the 46% stake in Bobcat prior to Bobcat’s merger with Doosan Robotics.
A hydrogen gas turbine model developed by Doosan Energy (Courtesy of Doosan Energy)
Enability, a small- and medium-sized nuclear reactor maker, will be able to reduce its debt by selling Bobcat. The company will transfer 720 billion won of its debt to a newly established investment company and raise 1.2 trillion won by selling non-core assets.
Through the corporate restructuring, Doosan Group aims to realign its core businesses into three main areas: clean energy, robots and other smart machines, and semiconductors and advanced materials.
Please email Woo-Sub Kim at Duter@hankyung.com.
This article was edited by Younghee Kim
