Doosan Bobcat scraps merger with Doosan Robotics

Doosan Group on Thursday scrapped a merger between heavy machinery maker Doosan Bobcat Inc. and collaborative robot manufacturer Doosan Robotics Inc., their holding company said on Thursday, after their 1:1 merger proposal provoked severe criticism from investors and the top financial regulator.

“Despite our efforts to persuade shareholders and communicate with the market regarding the necessity and appropriateness of a stock exchange (between Bobcat and Robotics), we concluded that it will be difficult to complete the stock exchange amid strong negative opinions from shareholders and the market,” Doosan Corp. said in a regulatory filing.

“The boards of directors of the two companies have decided to cancel their stock exchange agreement,” the holding company added.

Last month, they announced that Robotics would absorb Bobcat, the group’s cash cow, by taking over a 46.0% stake from Doosan Enerbility Co., a small nuclear reactor manufacturer, and the remainder from the market. Robotics has been in the red.

They said the deal would free up Bobcat from regulations that hinder it from chasing M&As because of the group’s ownership structure.

But their 1:1 merger proposal met with a strong backlash from investors and led to a call for a revision to the Capital Markets Act to properly assess the valuations of the companies to be merged.

Lee Bok-hyun, governor of the regulatory Financial Supervisory Service, also criticized the merger, saying it would only benefit their controlling shareholders.

“We will review various ways to maximize synergies between the two companies and revisit their structural reform plans in the future by communicating with the market and in line with amended regulations,” said Doosan.

While not absorbing Bobcat, Robotics will proceed with taking over a 46.0% stake in the heavy machinery company from Enerbility.

After the share transaction, Bobcat will become a subsidiary of Robotics and remain listed on the Korea Exchange.

Write to Hyung-Kyu Kim and Ik-Hwan Kim at khk@hankyung.com

Yeonhee Kim edited this article.