Doosan Robotics to merge with Doosan Bobcat by early 2025

Doosan Robotics Inc. will complete a merger with Doosan Bobcat Inc. by early next year, a move aimed at leading Bobcat to take an active role in expanding Doosan Group's business through mergers and acquisitions, for which Doosan Group is willing to spend several billion dollars.

Before combining the two companies, Doosan Robotics will take over Bobcat as a wholly-owned subsidiary to smooth the merger process related to contracts with their creditor banks and administrative procedures, Doosan Group said on Sunday.

The reshuffling will likely free up Bobcat from fair trade regulations, under which the company, as a sub-subdiairy of holding company Doosan Corp., must purchase 100% of a company it wants to buy.

Earlier this month, Doosan Corp. said that Doosan Robotics would take over a 100% stake in Bobcat from Doosan Enerbility Co. and through a tender offer. Enerbility is a power plant engineering company and intermdiary holding company of Doosan Group.

Bobcat, a construction machinery maker, is the conglomerate's cash cow. It holds around 1.8 trillion won ($1.3 billion) in cash and cash equivalents as of the end of March. In 2023, it earned 1.39 trillion won in operating profit.

Doosan Robotics, a world's leading collaborate robot maker, has around 380 billion won in cash on hand. 

Due to the fair trade regulations that force it to own 100% of a company it is acquiring, Bobcat dared not chase M&A or joint venture deals.

Its largest shareholder Enerbility, with a 46% stake in Bobcat, is not in a situation to seek M&As due to its accumulated losses on the back of the previous government's nuclear power phase-out plan. 

"Construction machinery companies are making every effort to incorporate autonomous driving and AI technology with their products, but Doosan Bobcat seemed to be at a standstill," said an official from the industry.

"Once the merger with Doosan Robotics takes place, it will expand into various fields,” he added.

Bobcat holds a 3.3% share in the global construction equipment market ranging from compact excavators to tractors, forklifts and skid-steer loaders. In 2007, Doosan Group acquired Bobcat for $4.9 billion, the then largest acquisition by a South Korean company.

For Doosan Robotics, the merger will expand its global sales network, utilizing Bobcat's global dealerships amounting to 1,500 across the world.

It could also raise its brand awareness, branding its collaborative robots as Bobcat.

"It will create as much synergy as Doosan Bobcat Korea did. It saw sales rising to 1.7 trillion won from 800 billion won in 2020 three years after it changed its brand name to Bobcat," said the official. 

Alongside the business reorganization, Enerbility will split into two companies – one ongoing business concern and a new investment firm that will own the 46% stake in Bobcat before the latter's merger with Doosan Robotics.

Enerbility, a small nuclear reactor manufacturer, will be able to reduce debts by unloading Bobcat. It will hand over 720 billion won in debts to the investment firm to be created and raise 1.2 trillion won by selling non-core assets.   

Through the corporate restructuring, Doosan Group aims to reshuffle its core businesses into three key sectors: clean energy; smart machines such as robots; and semiconductors and advanced materials.

Write to Woo-Sub Kim at Duter@hankyung.com
 

Yeonhee Kim edited this article