Allain, Doosan Bobcat Shareholder Letter Released... Demand for Clear Refusal of Comprehensive Stock Swap

Secures 1% Stake in Doosan Bobcat
Also Urges Normalization of Shareholder Return Rate

Align Partners Asset Management, a domestic activist fund known to have recently sent a shareholder letter to Doosan Bobcat, disclosed the contents of the shareholder letter on the 20th.

Align Partners announced on the same day that it sent the letter to Doosan Bobcat after acquiring a portion of Doosan Bobcat's shares on the 15th. Align Partners currently holds 1,003,500 shares of Doosan Bobcat, which corresponds to 1.0% of the total issued shares.

Align Partners explained, "We sent a confidential shareholder letter to the Doosan Bobcat board to encourage voluntary improvement through dialogue, but due to unplanned media reports, we were compelled to release a statement and disclose the contents of the shareholder letter."

Align’s demands include four points: ▲ publicly declare that it will not re-pursue a comprehensive stock swap with Doosan Robotics ▲ use the KRW 1.5 trillion, which the Doosan Bobcat board decided to allocate for responding to stock purchase rights, entirely for shareholder returns (special dividends) ▲ announce a value-up plan within the year that normalizes the shareholder return ratio to 65%, the average level of peer companies such as Caterpillar, Deere, and Kubota ▲ restructure the Doosan Bobcat board and introduce institutional measures to ensure board independence, such as a shareholder nomination system for outside director candidates and an advisory committee for the outside director nomination committee.

Lee Chang-hwan, CEO of Align Partners, pointed out, "Doosan Bobcat is currently trading at about 2.8 times this year’s expected EBITDA (earnings before interest, taxes, depreciation, and amortization), which is less than a quarter of the peer average of 13.6 times. The Doosan Bobcat board’s approval of the comprehensive stock swap agenda with Doosan Robotics through an approximately 30-minute online video meeting, without sufficiently considering conflicts of interest between controlling and minority shareholders or procedures to resolve them, has raised concerns in the capital market."

He added, "The Doosan Bobcat board has yet to clearly state its position on whether to re-pursue the comprehensive stock swap with Doosan Robotics. If there is a possibility of re-pursuit, investors are well aware that the lower the Doosan Bobcat stock price, the more favorable the exchange ratio is for the controlling shareholder family of Doosan, which negatively impacts the stock price. Since there is a conflict of interest between controlling and minority shareholders, it is necessary to clearly announce that the comprehensive stock swap will not be re-pursued and to demonstrate measures to guarantee board independence to resolve the issue."

He continued, "The significantly low shareholder return ratio (18%) compared to the peer average (65%) is another major cause of Doosan Bobcat’s undervaluation and needs to be normalized. In particular, the Doosan Bobcat board resolved to use KRW 1.5 trillion of market capitalization at the time of the comprehensive stock swap resolution for responding to stock purchase rights (share buybacks), which means this amount is available for shareholder returns. Therefore, it should be used as is for shareholder returns to restore investor trust."

Meanwhile, Align Partners requested the Doosan Bobcat board to respond to the shareholder letter by November 15 through public methods such as disclosure, IR announcements, or press releases. The disclosed shareholder letter can be viewed on the shareholder platform Beside Korea.