NPS steps back from Doosan Robotics' Bobcat merger

The National Pension Service (NPS) appears to be stalling on a vote for Doosan Robotics Inc.'s merger with Doosan Bobcat Inc., with major proxy advisors divided over the controversial deal.

Bobcat would be spun off from Doosan Enerbility Co., its largest shareholder with a 46% stake, and then taken over by Robotics.

The deal has provoked strong criticism from shareholders, who argue that the merger between loss-making Robotics and cash cow Bobcat fails to properly reflect the latter's enterprise value and would hurt minority shareholders' interests.

On Monday, the NPS Investment Management’s decision-making committee for responsible investing decided to back the spin-off and takeover if the base prices of Enerbility and Robotics, set for the transaction, are higher than their buyback prices of 20,890 won and 80,472 won as of Jan. 10, respectively.

Otherwise, it will abstain from voting at an Enerbility extraordinary shareholder meeting scheduled for Jan. 12. Shares in Enerbility gained 3.87% to close at 17,380 won on Monday.

Industry observers say the South Korean pension fund is taking a step back from the intra-group deal that finally cleared a regulatory hurdle, giving foreign and minority shareholders casting votes.

The NPS holds a 6.85% stake in Enerbility; Doosan Corp. and its stakeholders own 30.67%. Including the NPS' stake, foreign and minority shareholders hold 64.56% of Enerbility's outstanding shares.

ROBOTICS' BUYBACK PRICE

At Robotics’ shareholder meeting, also set for Jan. 12, the NPS will also vote for its takeover of Bobcat only when Robotics’ base share price for the merger as of Jan. 10 is higher than its buyback price of 80,472 won.

Its shares advanced 6.21% to close at 57,400 won on Monday. But it sees little difficulty in winning shareholders' support given that Doosan Corp., the group's holding company, owns 68.2% of Robotics.

DIVERGENT ADVISORS

Proxy advisor International Shareholder Services (ISS) said on Monday that Robotics' merger with Bobcat constitutes a conflict of interest and only benefits controlling shareholders.

Align Partners Capital Management Inc., a Korean activist investor, joined ISS in advising shareholders to veto the merger. It added that major global pension funds, including CalPERS., CPPIB, BCI and City of New York Group Trust, have voiced their opposition to the deal.

In contrast, another proxy advisor Glass Lewis and a slew of Korean advisory groups advocated for the Doosan Group deal.

To go ahead with the merger, at least one-third of Enerbility shareholders must attend the shareholder meeting next month and two-thirds of attendees need to approve it.

A spin-off of Enerbility that owns Bobcat will be merged into Robotics at a ratio of 1:0043, up from the previously proposed 1:0031 ratio.

Write to Byung-Hwa Ryu at hwahwa@hankyung.com
Yeonhee Kim edited this article.