[Reporter’s Notebook] Alienated Shareholders, Lost Trust

Authorities Halt Doosan Business Restructuring Plan
Minority Shareholders Complain of "Unfavorable Merger"

The business restructuring plan announced by Doosan Group two weeks ago has hit a snag. The financial authorities requested Doosan to amend the securities registration statement regarding the merger the day before, delaying its execution. The restructuring plan centers on merging Doosan Robotics and Doosan Bobcat. The reason for the amendment request is to provide detailed explanations and supplements about potential risks to profitability and financial stability in these companies. This move is interpreted as a response from the authorities amid growing opposition from shareholders.

SK Group’s merger plan between SK Innovation and SK E&S, announced a week ago, also disappointed many minority shareholders. Since the announcement, the stock price has been falling continuously, and the rosy outlook and plans presented by the company have faded. Shareholders who firmly believed that the management would nurture the company well are now expressing not only disappointment but anger over the sudden developments.

Looking at the stock price trends alone, the disappointment with the restructuring plans of both groups’ affiliates is evident. SK Innovation’s stock price is below the estimated price at which shareholders opposing the merger can exercise their right to request stock purchase. The stock prices of Doosan Bobcat and Doosan Enerbility, which must be split from Doosan Bobcat, are also below the stock purchase request price. With shareholder trust severely shaken, if more shareholders exercise their purchase rights, the merger itself could be canceled. There are even reports that a significant number of foreign investors have turned their backs.

Civic groups unanimously point out the problems with this restructuring plan. In the political arena, a so-called ‘Doosan Bobcat Prevention Act,’ an amendment to the Capital Markets Act at the heart of this controversy, has been proposed. Furthermore, voices calling for amendments to the Commercial Act to include shareholders in the ‘duty of loyalty of directors’ are growing. It is difficult to predict in which direction the situation will escalate.

Companies argue that there is no ‘illegal’ activity in this business restructuring process, citing expert opinions. This is because the current Capital Markets Act stipulates that when listed companies merge or exchange stocks, the stock value (merger price) must be calculated based on the stock price. They express frustration at being criticized despite having calculated the merger price according to the law.

Of course, since the corporate value of listed companies, i.e., stock prices, fluctuate constantly, there will always be controversies regardless of when a merger is attempted. However, there has been insufficient explanation as to why the merger was decided at this particular time, which favors the largest shareholders and disadvantages minority shareholders.

SK and Doosan Group stand at a turning point in business transformation. They have chosen future new businesses such as batteries and robotics and are in a situation where they must grow their businesses through large-scale investments. Few would deny the urgency of establishing a new growth foundation among many minority shareholders.

This controversy has caused both groups to lose trust from many stakeholders. It will serve as a lesson for companies pursuing business restructuring in the future. Investors choose companies according to their investment philosophy. What we must do is urgently discuss institutional improvement measures to prevent this controversy from recurring. The ‘Kukjang (Korean stock market)’ must not be driven away, and the ‘Korea Discount (undervaluation of the Korean stock market)’ must not be repeated any longer.

This content was produced with the assistance of AI translation services.