It Ultimately Depends on Public Sentiment
Doosan Group has calculated the merger ratio between Robotics and Enerbility to favor existing shareholders in an attempt to appease minority shareholders, but it remains uncertain whether it can pass the Financial Supervisory Service's scrutiny. This is because Doosan Group insisted on the existing market price-based valuation method rather than the discounted cash flow (DCF) or dividend discount model (DDM) methods cited by the authorities as examples when requesting corrections to the securities registration statement.
According to the Financial Supervisory Service's electronic disclosure system on the 23rd, Doosan Robotics submitted a corrected securities registration statement related to the company split merger to the FSS on the 21st. An additional correction was submitted on the 22nd, but this was due to a simple clerical error regarding the scheduled listing date of the new shares.
According to the revised filing, the merger ratio between Doosan Robotics and Doosan Enerbility increased from the previous 1 to 0.031 to 1 to 0.043. Doosan calculated the value of Doosan Bobcat shares held by the newly established split-off entity of Enerbility by applying a 43.7% control premium to the market price. Park Sang-hyun, CEO of Doosan Enerbility, explained, "The merger ratio was increased by adding about a 43% premium to the market price, reflecting market opinions that Doosan Bobcat's market price was undervalued."
Earlier, the FSS requested Doosan to revise the merger securities registration statement, instructing them to detail the company's decision-making process, contents, and synergies, and to apply valuation models based on future earnings effects such as discounted cash flow (DCF) and dividend discount model (DDM) for the split-off entity holding Bobcat shares. The market expected Doosan to accept the authorities' points as much as possible to get the filing approved, but this expectation was not met.
However, Doosan provided a detailed explanation for maintaining this approach. In the corrected securities registration statement of Doosan Robotics, Doosan stated, "Considering that the value of Doosan Bobcat shares is already established as a listed stock with a market price, and that applying discounted cash flow or dividend discount models involves many assumptions including future sales and operating profit estimates, which can vary depending on judgment, resulting values can also differ significantly based on the evaluator's judgment, we concluded that applying discounted cash flow models is not feasible." This has led to speculation that the special circumstances of an unlisted company with a listed subsidiary are being taken into account.
They also attached a revised valuation opinion from an external accounting firm. Anjin Accounting Firm stated, "It is considered reasonable and appropriate to consider a control premium on Doosan Bobcat's market price when calculating the controlling shareholder's equity value held by the merged company," and explained, "We reviewed the control premium reflected by agreement between the two companies by analyzing cases of listed companies involving domestic control transfers."
An FSS official said, "We requested valuation using generally accepted methods, and Doosan detailed why they used the market price-based method in this filing," adding, "Since there is no definitive answer, we will carefully examine whether investors can accept it."
Meanwhile, on the previous day, Doosan Bobcat closed at 40,500 KRW, down 7% from the previous session. Doosan Robotics also ended trading at 67,900 KRW, down 5.17%. Both stocks had risen for three consecutive trading days before turning downward on this day.
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