Doosan Bobcat Inc., a leading compact construction machinery and equipment manufacturer under South Korea's Doosan Group, will reacquire its former affiliate Mottrol Co. for 246 billion won ($178.6 million), less than four years after its initial divestiture. This strategic move was approved by Doosan Bobcat's board, as disclosed in a regulatory filing on Wednesday. The acquisition involves purchasing a 100% stake, or 493,948 shares, in Mottrol from a consortium led by Korean private equity firms Socius Advisors and Well to Sea Investment Co. for 246 billion won in cash.

The integration of Mottrol, Korea’s premier hydraulic component manufacturer, is expected to enhance Doosan Bobcat's business competitiveness, particularly in the hydraulic parts sector, which is critical for industrial equipment. Previously, Doosan Bobcat and Mottrol were part of the same conglomerate, but in 2020, Doosan Group, burdened by significant debt, sold Mottrol to the Socius-Well to Sea consortium for 453 billion won as part of a broader restructuring effort.

Mottrol has been a key player in Doosan Group’s portfolio, reporting 57.8 billion won in consolidated operating profit on sales of 663.8 billion won in 2020. The sale of Mottrol was highly contested, with bids from Morgan Stanley Private Equity, China's XCMG, and a Korean consortium of NH Investment & Securities PE and Opus PE. Ultimately, the Socius-Well to Sea consortium prevailed.

Founded in 1974, Mottrol joined Doosan Group in 2008 and was merged with Doosan Corp., the group's holding company, in 2010. However, a decade later, Doosan Group, seeking capital in exchange for a state bailout, decided to divest Mottrol and other units. Mottrol also produces military equipment parts but will be reintegrated into Doosan without its defense system manufacturing division. In December of the previous year, the Socius-Well to Sea consortium separated the defense system hydraulic component-making business from Mottrol to establish MNC Solution. The consortium intends to list MNC Solution on Korea’s main Kospi bourse in the second half of this year after divesting Mottrol's non-military hydraulic parts business to Doosan.

Investors responded positively to Mottrol's return to Doosan Group, with Doosan Bobcat's shares rising 3% to 54,400 won on Wednesday. Doosan Bobcat anticipates significant synergies with Mottrol. Scott Park, Chief Executive Officer of Doosan Bobcat, stated, "We will seek to create synergy between Doosan Bobcat and Mottrol through vertical integration while pursuing the growth of Mottrol with more orders."

Doosan Bobcat became part of Doosan Group in 2007 following the acquisition of Bobcat from the US-based industrial equipment company Ingersoll Rand. Last year, Doosan Bobcat joined the global top 10 construction equipment makers by sales. The company's operating profit for 2023 increased by 29.7% year-on-year to 1.39 trillion won, with sales rising 13.2% to 9.76 trillion won over the same period.

Doosan plans to finalize the acquisition of Mottrol on September 30 this year, following the signing of a stock sale agreement with the Socius-Well to Sea consortium this week.