Doosan Bobcat to buy ex-sibling Mottrol for $178.6 million

Doosan Bobcat Inc., a major compact construction machinery and equipment maker under South Korean conglomerate Doosan Group, will buy back its former sibling Mottrol Co. for 246 billion won ($178.6 million) less than four years after its sudden departure from the group.

The company announced in a regulatory filing on Wednesday that it gained board approval to purchase a 100% stake, or 493,948 shares, in Mottrol from a consortium formed by Korean private equity firms Socius Advisors and Well to Sea Investment Co. for 246 billion won in cash.

The construction equipment maker expects the oil pressure machine maker with leading hydraulic part-making technology to bolster its business competitiveness.

Hydraulic parts are core parts of industrial equipment, and Mottrol is Korea’s No. 1 hydraulic component maker.

Doosan Bobcat and Mottrol used to be sister companies under Doosan Group. But in late 2020, the Korean industrial group with mounting debt sold Mottrol to the Socius-Well to Sea consortium for 453 billion won as part of its restructuring.

SYNERGY BETWEEN TWO LUCRATIVE BUSINESSES

The oil pressure machine-making company was long considered one of Doosan Group’s mainstay businesses. When it was sold in 2020, Mottrol reported 57.8 billion won in consolidated operating profit on sales of 663.8 billion won.

Other companies vying for the acquisition included Morgan Stanley Private Equity, China’s heavy machinery giant XCMG and another Korean consortium of NH Investment & Securities PE and Opus PE. The Socius-Well to Sea consortium, however, won the trophy after outbidding the other contenders.

Mottrol, founded in 1974, joined Doosan Group in 2008 and was merged with Doosan Corp., the group’s holding company, in 2010.

Ten years later, the debt-laden Doosan Group, however, decided to let it go along with other units to raise capital in return for a state bailout.

Mottrol also produces military equipment parts but will return home without the defense system part-making business.

In December last year, the Socius-Well to Sea consortium spun off the defense system hydraulic component-making business from Mottrol to set up MNC Solution. 

The PE consortium plans to list MNC Solution on Korea’s main Kospi bourse in the second half of this year after selling Mottrol with only hydraulic parts for non-military industrial machinery and equipment to Doosan. 

Investors welcomed the return of Mottrol to Doosan Group, lifting Doosan Bobcat’s shares to 54,400 won, up 3%, on Wednesday.  

Doosan Bobcat expects great synergy with Mottrol.

“We will seek to create synergy between Doosan Bobcat and Mottrol through vertical integration while pursuing the growth of Mottrol with more orders,” Doosan Bobcat Chief Executive Officer Scott Park said.

Doosan Bobcat joined Doosan Group in 2007 after the Korean parent acquired Bobcat from US-based industrial equipment company Ingersoll Rand.

It joined the global top 10 construction equipment makers' club in terms of sales last year for the first time. Its operating profit for 2023 jumped 29.7% on-year to 1.39 trillion won on sales of 9.76 trillion won, up 13.2% over the same period.

Doosan plans to complete the purchase of Mottrol on Sept. 30 of this year after signing a stock sale agreement with the Socius-Well to Sea consortium this week.

Write to Sang Hoon Sung at uphoon@hankyung.com


Sookyung Seo edited this article.