Doosan Robotics-Bobcat merger called off

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Doosan Robotics-Bobcat merger called off

Published: 10 Dec. 2024, 18:44

LEE JAE-LIM
[email protected]

Audio report: written by reporters, read by AI

Doosan headquarters in Jung District, central Seoul [DOOSAN]

Doosan Group called off its proposed plan to merge affiliates Doosan Bobcat and Doosan Robotics after nationwide political turmoil sent the stock prices of its affiliates plunging.

The conglomerate has withdrawn its proposed merger agreement and canceled a shareholder's meeting that had been scheduled for Thursday, during which a vote on the deal was slated to take place.

“The company, after careful internal review and discussion, has decided to terminate the ongoing merger process due to current uncertainties in the external business environment and mounting challenges to conclude the transaction of a large-scale exercise of appraisal rights,” Doosan said in an electronic disclosure, adding that “unforeseen external issues” had significantly disrupted the domestic stock market, resulting in a sharp decline in the share prices of the subsidiaries involved in the deal over a short period.

Doosan had been pushing to fold its cash cow Doosan Bobcat as a subsidiary of Doosan Robotics, a much smaller robot manufacturer, for nearly five months, having submitted its initial securities report on July 15.

The initially proposed merger ratio of 1:0.031 drew widespread criticism from investors in Doosan Enerbility, Doosan Bobcat's largest shareholder with a 46.1 percent stake, who worried that it would erode the parent company's valuation. Financial regulators also expressed concern that the merger could unfairly favor Doosan Robotics. The corporation revised its merger ratio to 1:0.043 in October in response.

The National Pension Service, Doosan Bobcat's second-largest shareholder with a 6.94 percent stake, conditionally agreed to the merger on the premise that Doosan Enerbility’s shares exceed the buyback price.

The buyback price for Doosan Enerbility's shares had been set at 20,890 won ($14.61).

The merger was expected to boost Doosan's presence in the sectors of clean energy, smart machines and advanced materials. Through the spinoff of its cash-generating unit, Doosan Enerbility aimed to focus on gas turbines and small modular reactors while Doosan Robotics planned to strengthen its robotics business by advancing its automation and AI capabilities.

Shares of Doosan Robotics plummeted 20 percent to 52,200 won on Tuesday compared to the closing price on Tuesday, Dec. 3, a few hours before President Yoon Suk Yeol’s martial law declaration. Doosan Enerbility tumbled 18.8 percent to 17,180 won during the same period. Doosan Bobcat shares remained largely unaffected, dipping 0.35 percent to close at 43,200 won.

Shares of Doosan Enerbility closed at 21,150 won on Dec. 3, but Yoon’s martial law announcement drastically widened the gap between the predetermined buyback price and the actual share price, resulting in a hefty financial burden for Doosan Enerbility.

BY LEE JAE-LIM [[email protected]]