Bobcat, Doosan Robotics end merger talks

Doosan will no longer merge Doosan Bobcat with Doosan Robotics due to regulatory and industry scrutiny. 

Plans to combine the parent company’s two divisions began July 11 but ended after pressure from regulators and shareholders, Scott Park, chief executive and vice chairman at Doosan Bobcat, said in a Aug. 29 letter to shareholders. 

“We believe that no restructuring of the business or corporate governance can be accomplished without full trust and support of our shareholders,” the letter reads.

The companies originally planned a stock swap in which one Bobcat share would be traded for 0.63 Robotics shares, despite Bobcat having $8.31 billion in total assets compared with Robotics’ $329 million in total assets, according to the companies’ earnings releases. 

Criticism from Korean regulators 

Korean regulators began targeting the merger as it potentially damaged shareholders, Rep. Kim Hyun-jung of the Democratic Party of Korea said in a July 25 South Korean National Assembly report. 

“The merger was carried out in a way that damages minority shareholders for the benefit of major shareholders,” he said. 

The merger of non-equals represented a serious problem for shareholders, according to a Korean Corporate Governance Forum release. 

“It is a shocking situation that Doosan Bobcat shareholders must exchange their shares for those of Doosan Robotics, a company with a revenue scale of only 1/183rd and a massive operating loss,” according to the release. “This is a sudden blow to countless shareholders who believed in the intrinsic value of Doosan Bobcat as a good, undervalued company with significant long-term potential.” 

The merger also would have damaged Bobcat’s long-term financial prospects, according to a July 17 S&P Global research note. 

“Moreover, we believe Doosan Bobcat’s financial policy may change because Doosan Robotics can utilize Doosan Bobcat’s strong profit and cash flow generation to support its growth-related investments,” according to the research note. “Additionally, the exercising of appraisal rights may result in up to KRW1.5 trillion of cash outflow for Doosan Bobcat, which is significant given that Doosan Bobcat’s cash balance was US$1.3 billion as of end-March 2024. These would likely put some pressure on Doosan Bobcat’s credit metrics and stand-alone credit profile.” 

Bobcat, Doosan Robotics going forward 

While the merger is off, Doosan Bobcat and Doosan Robotics are still looking to work together, Doosan Bobcat’s Park said. 

“The company will continue to seek ways to create synergies with Doosan Robotics, including reviewing the business restructuring based on the communication with the market and regulatory changes,” he said. “We regret the confusion this has caused.”   

William Ryu, CEO of Doosan Robotics, agreed in an Aug. 29 company release. 

“We anticipate that an integrating with Bobcat will maximize the business growth, particularly in key robotics markets in North America and Europe, which are the largest markets for robotics,” he said.  

“We continue to believe that we can jointly explore new business opportunities in the autonomous mobile robot and automated guided forklift markets.”

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