Doosan Enerbility Proceeding with Merger After Demerger... "Scale of Buyout Requests Is Key"

Doosan Bobcat Merger Withdrawn... Plan B Activated

In the bidding competition for the new Dukovany nuclear power plant in the Czech Republic, "Team Korea," led by Korea Hydro & Nuclear Power and consisting of Doosan Enerbility, Daewoo Engineering & Construction, and Korea Electric Power Technology, was selected as the preferred negotiator, defeating the French Electric Utility Company (EDF). The photo was taken on the 18th at Doosan Tower, Jung-gu, Seoul. Photo by Jinhyung Kang aymsdream@

On the 30th, KB Securities stated that the withdrawal of the comprehensive stock swap merger plan between Doosan Bobcat and Doosan Robotics became an event where the major shareholder changed from Enerbility to Robotics.

Jung Dong-ik, a researcher at KB Securities, analyzed, "It cannot be completely ruled out that Doosan Robotics may attempt to repay borrowings through the partial sale of Doosan Bobcat shares in the future," adding, "In this case, there is a possibility that an overhang issue may arise."

Researcher Jung pointed out that the key to the success of the governance restructuring still lies in the scale of the tender offer. He explained, "There is no change in the point that the tender offer rights should not be excessively exercised for the revised plan to succeed," and "Especially, the consent of Doosan Enerbility shareholders is important because the core subsidiary, which accounts for most of the consolidated profit and loss, is being spun off."

Currently, due to the market decline and investor backlash against the governance restructuring plan, the stock prices of the companies have fallen below the tender offer price. Researcher Jung diagnosed, "As seen in the recent SK Group case, the negative sentiment of the National Pension Service toward artificial mergers against the interests of minority investors is also expected to be a variable."

Lee Dong-heon, a researcher at Shinhan Investment Corp., analyzed the stock price variables of Doosan Bobcat as △disappointment selling due to the disappearance of the tender offer △burden of industry downturn after the Q2 earnings shock △expectations for dividend increases to strengthen synergy.

He added, "If excessive tender offer applications by existing shareholders of Doosan Enerbility and Doosan Robotics occur, or if the agenda at the extraordinary general meeting is rejected, the entire governance restructuring may be canceled," and "If additional correction requests from regulatory authorities arise, there is also concern about schedule delays."