Align Partners calls on Doosan Bobcat to boost shareholder value
Ik-Hwan Kim
5 HOURS AGO
Doosan Bobcat’s all-electric compact track loader T7X Align Partners Capital Management Inc., a South Korean activist fund, has called on Doosan Bobcat Inc., a global construction machinery maker owned by Doosan Group, to implement measures to boost its shareholder value.
According to investment banking industry sources on Friday, Align Partners on Wednesday sent a letter to Doosan Bobcat’s management requesting to increase shareholder returns, including higher dividends, and sell non-core assets.
Align Partners is a minority shareholder of Doosan Bobcat with a 1% stake in the machinery maker.
Given its small stake in Doosan Bobcat, Align Partners isn’t interested in management control of the company, industry officials said.
But the activist fund believes Doosan Bobcat’s corporate value is significantly lower than its fundamentals, they said.
Align Partners Capital Management is a Seoul-based activist fund BOBCAT, DOOSAN’S CASH COW
In July, Doosan Corp., the conglomerate’s holding company, pushed for corporate restructuring that involved Doosan Enerbility Co., a power plant engineering affiliate, handing over its entire 46.06% stake in Doosan Bobcat, a group cash cow, to loss-making Doosan Robotics Inc.
The group, however, scrapped the plan in August amid opposition from investors and Korea’s financial watchdog agency, the Financial Supervisory Service (FSS).
FSS Governor Lee Bok-hyun criticized the deal, saying it would only benefit Doosan’s controlling shareholders.
Align Partners founder and CEO Lee Chang-hwan Doosan Bobcat manufactures construction equipment such as compact excavators, tractors, forklifts and skid-steer loaders and sells them under the Bobcat brand around the globe.
Doosan Group acquired Bobcat from US-based industrial equipment company Ingersoll Rand for $4.9 billion in 2007 — the conglomerate’s largest overseas acquisition at the time.
The market consensus for Doosan Bobcat’s 2024 operating profit is slightly more than 1 trillion won ($729 million).
But the company’s price-to-earnings ratio is 4, far below the Kospi 200 average multiple of 20.
"With expectations that the US government will expand housing supply after the presidential election, Doosan Bobcat’s sales are likely to grow significantly. Align Partners may join forces with Doosan Bobcat’s foreign investors to launch a harsher attack on the machinery maker’s management," said an industry official.
A Doosan Bobcat excavator
Shares of Doosan Bobcat closed 7% higher at 43,000 won, outperforming the broader Kospi index’s 0.6% fall.
ALIGN PARTNERS’ ACTIONS AGAINST OTHER FIRMS
Align Partners founder and CEO Lee Chang-hwan has been engaged in several cases of shareholder activism demanding drastic changes in Korean companies’ management behavior.
In 2022, the activist fund with a 1.1% stake in K-pop music label giant SM Entertainment Co. asked the entertainment company to end its dubious production business contracts with one of its affiliates.
Align Partners has also called for a board overhaul at JB Financial Group to enhance corporate governance.