New Reorganization Plan Increases Overhang Risk for Doosan Bobcat

• Our overall assessment of the new reorganization plan by the Doosan Group continues to be Negative, because Doosan has not given up trying to eventually merge Bobcat and Robotics.

• Doosan Group's new reorganization plan is the opposite of KISS strategy, involving several moving parts and complicated deal structure.

• We have also provided three main recommendations on how to raise the valuation of Doosan Bobcat without rushing to merge Bobcat and Robotics.

Conclusion First

Many investors prefer KISS ("Keep It Simple Stupid") strategy when it comes to corporate reorganizations. In the past couple of days, the Doosan Group has announced new reorganization plan for its valuable entities including Doosan Enerbility (034020 KS), Doosan Bobcat Inc (241560 KS), and Doosan Robotics (454910 KS).

Doosan Group's new reorganization plan is the opposite of KISS strategy, involving several moving parts and complicated deal structure. Although the new reorganization plan is better than the previous plan for the minority shareholders of Doosan Enerbility, there is still significant amount of uncertainty regarding an eventual merger between Doosan Bobcat and Doosan Robotics.

The new deal structure may initially have a positive impact on Doosan Robotics and Doosan Corp (000150 KS). However, because many investors will now evaluate these companies based on the new merger ratios, if many investors continue to sell shares in Doosan Bobcat, this could have negative long-term impact Doosan Robotics and Doosan Corp as well.

In short, we now have Negative Views of Doosan Bobcat, Doosan Robotics, and Doosan Corp. If Doosan Group is able to complete the spin off of NEWCO of Doosan Enerbility (mainly its 46% stake in Doosan Bobcat), this could have a slightly positive impact on Doosan Enerbility under the revised deal structure.