Editor’s note: This report has been updated to include additional information on Bobcat’s exclusion in this deal, per media reports.
Fulfilling earlier rumors, the Korean powers Hyundai and Doosan Group have reached a deal that will see Hyundai agree to buy a controlling stake of Doosan’s Infracore equipment division by the end of the year, according to the Korea Economic Daily and other media outlets.
Hyundai Heavy Industries Holdings is buying a 36% controlling stake of Doosan Infracore, a division of Doosan Group comprised of both Doosan’s own brand of machines and those of the Bobcat brand which it acquired in 2007. The sale is expected to be finalized in mid-2021.
Notably, Doosan Bobcat and Doosan Infracore North America separated their businesses in 2018, after operating together for seven years. Doosan Infracore purchased Bobcat in 2007.
Doosan-branded machines will be owned by Hyundai under the deal. The deal, however, doesn’t mean that North American customers will see a combined Hyundai/Doosan market presence, Doosan Infracore North America told Equipment World in a statement.
“It is important to note that this acquisition is being conducted by HHIH, and not Hyundai Construction Equipment (HCE),” says the statement. “Under the terms of the deal, the intent is for Doosan Infracore and HCE to operate as independent companies under HHIH. There are currently no plans to merge HCE or Doosan Infracore. Both companies, along with their people, dealer networks and brands will be kept independent from one another once the sale is final. Final negotiations are currently underway and the sale is expected to be finalized sometime in mid-2021.”
“Doosan Infracore North America, LLC, will continue to support its dealers and customers throughout the United States and Canada by providing the industry’s best equipment, leading technologies and innovations, and unmatched customer service and support,” continues the statement.
Using figures published in the 2020 KHL Yellow Table, the presumed union of Doosan Infracore and HHIH’s Hyundai Construction Equipment would create a firm with a 4.5% global market share and move Doosan up from its current No. 9 global position to No. 7, displacing Hitachi Construction Machinery.
The Korea Economic Daily report pegs the deal at between $640 to $735 million, although other media reports said it would be close to $900 million.
The move will help Hyundai Heavy Industries Holdings speed up its market expansion in China and give it access to Doosan’s engine business, says the economic website.
Reports of Doosan Group’s exploration of a sale of a 36% stake in its Infracore subsidiary began to surface in June of this year.
The sale of the Doosan Infracore stake was prompted by parent Doosan Group’s effort to salvage another of its subsidiaries, the debt-ridden Doosan Heavy Industries & Construction. Acquired by Doosan Group in 2001, the division provides power generation and includes engineering and construction services in Doosan’s home country of South Korea.