Shareholder Letter in the Name of CEO Park Sang-hyun
Approval of Bobcat Split Merger at the General Meeting on the 12th
Doosan Enerbility has appealed to shareholders for support ahead of an extraordinary general meeting to discuss the split-merger of Doosan Bobcat as part of its business governance restructuring.
On the 3rd, Doosan Enerbility posted a second shareholder letter on its website under the name of CEO Park Sang-hyun regarding the split-merger plan to separate Doosan Bobcat from Doosan Enerbility and incorporate it into Doosan Robotics.
CEO Park stated, "We apologize for not sufficiently comparing the two options and explaining them to shareholders in advance," adding, "After deep consideration and review, the company has determined that this business restructuring will benefit both the shareholders and the company more than an external sale of Doosan Bobcat."
He continued, "The company requires an annual investment of at least 500 billion to 600 billion KRW to expand various business opportunities, and growth can only accelerate when timely and swift investments are made."
He emphasized business opportunities such as the surge in overseas combined power plant projects centered in the Middle East, an increase in domestic combined cycle power plant conversion projects, expansion of orders for Small Modular Reactors (SMR) and gas turbines due to rising power demand from big tech companies, and expectations for global nuclear power plant construction. According to CEO Park, business growth depends on making timely and rapid investments.
Furthermore, CEO Park explained why Doosan Bobcat’s shares will not be sold externally in this business restructuring. He stressed, "If the sale process begins, dealers and employees may become unsettled, causing serious damage to the business, so share sales cannot be chosen lightly unless in an urgent situation."
He also added, "Since most of Doosan Bobcat’s operations are overseas, considering the sales scale, corporate merger notifications are required in more than 10 countries (including domestic and EU), and it is difficult to predict when approvals will be completed," further explaining, "Considering the industry downturn cycle, delays in the sale period or the success of the sale are even more uncertain."
In addition, Doosan Enerbility posted a third shareholder letter rebutting ISS, the only major domestic and international proxy advisory firm that issued a recommendation against the plan. Previously, in Korea, the Korea ESG Standards Institute and Korea ESG Research Institute recommended approval of the split-merger plan, and the global proxy advisory firm Glass Lewis also issued a favorable recommendation.
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 Power Company (EDF). The photo was taken on the 18th at Doosan Tower, Jung-gu, Seoul. Photo by Jinhyung Kang aymsdream@
CEO Park pointed out errors made by ISS in issuing its negative recommendation.
He explained, "ISS criticized that the special committee composed of outside directors did not review this split-merger plan, but this stems from ignorance of Korean Commercial Law," adding, "According to Commercial Law, split-mergers cannot be delegated to a committee within the board of directors; the board must directly resolve and propose it to the shareholders' meeting."
The letter also included the background and expected effects of the split-merger, such as increasing the merger ratio to minimize shareholder dissatisfaction and creating internal synergies. CEO Park said, "The stock price rose 5.7% on the 22nd of last month, when the securities registration statement related to the business restructuring took effect, compared to the previous day," adding, "If the market had judged this business restructuring to be unfavorable to the company, such a stock price increase would have been impossible."
Meanwhile, Doosan Enerbility and Doosan Robotics will hold a shareholders' meeting on the 12th to approve this split-merger plan. They plan to complete the business restructuring by the merger date on January 31 of next year.
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