Economic Reform Solidarity: "Doosan Business Restructuring Is Not Beneficial to Common Shareholders"

"Direct Equity Acquisition Method Needed"

The Economic Reform Solidarity recently argued that the restructuring method of Doosan affiliates' business structure does not align with the interests of common shareholders.

Bundang Doosan Tower, Seongnam-si, Gyeonggi Province. Photo by Jinhyung Kang aymsdream@

On the 17th, the Economic Reform Solidarity released a statement saying, "We believe that the method of transferring control chosen by the boards of Doosan Enerbility and Doosan Bobcat is not the best choice for the company and its shareholders' interests."

Doosan Group recently decided to reorganize its business structure into three major sectors: clean energy, smart machines, and advanced materials. First, Doosan Enerbility will be divided into an operating company and a newly established investment corporation, with the new investment corporation owning shares of Doosan Bobcat. Then, Doosan Robotics will merge with the new investment corporation, exchanging shares of Doosan Bobcat to make Doosan Bobcat a wholly owned subsidiary.

The Economic Reform Solidarity criticized this method as not beneficial to the common shareholders of Doosan Enerbility and Doosan Bobcat. They explained, "If Doosan Enerbility had directly sold its Doosan Bobcat shares to Doosan Robotics, and then Doosan Bobcat had repurchased shares through a tender offer, both Doosan Enerbility and Doosan Bobcat shareholders could have traded shares at better prices."

They added, "This case highlights the shortcomings of the current legal system in protecting common shareholders," and suggested, "To prevent harm to common shareholders, a Majority of the Minority (MoM) approval system should be introduced, and directors' fiduciary duties should be strengthened to consider the interests of common shareholders as well." MoM is a system requiring the approval of a majority of common shareholders, not controlling shareholders, for major agenda items to pass.