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 prodding Bobcat to take an active role in expanding Doosan Group's business through M&As, for which Doosan Group is willing to spend several billion dollars.

Before merging the two companies, Doosan Robotics will take over Bobcat as a wholly owned subsidiary to smooth the merger process in relation 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-subsidiary 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. through a tender offer. Enerbility, a power plant engineering company, is an intermediary holding company of Doosan Group.

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

Doosan Robotics, a world-leading collaborative robot maker, has about 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 did not dare chase after M&As or joint venture deals.

Its largest shareholder Enerbility, with a 46% stake in Bobcat, is not in a position 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 into their products, but Doosan Bobcat seemed to be at a standstill," said an industry official.

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

Bobcat holds a 3.3% share of the global construction equipment market, that ranges 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 that number 1,500. 

It could also raise its brand awareness by branding its collaborative robots as Bobcats.

"It [the merger] will create as much synergy as Doosan Bobcat Korea did. It saw sales rise 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 debt by unloading Bobcat. It will hand over 720 billion won in debt 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