- Expecting to maximize the synergies of its affiliates and secure profitability and a future growth engine

Doosan Corporation is set to take over Korea’s No. 1 hydraulic equipment maker, Tongmyung Mottrol, with a view to adding to its future growth engines.

On March 5, at Doosan Tower in Euljiro 6(yuk)-ga, Doosan signed an agreement to acquire a 53% equity in Tongmyung Mottrol for the price of 104 billion won. The signing ceremony was attended by Tongmyung Mottrol’s CEO, Kwon Eun-young, Doosan Corp.’s Vice Chairman, Kang Tae Soon, and other personnel. Doosan will push for this acquisition jointly with financial investors, and will raise an acquisition fund of about 20 billion won on its own.

Located in Changwon-si, Gyeongsangnam-do, Tongmyung Mottrol manufactures key excavator components such as main pumps, travel motors and other hydraulic machines, and controls the largest domestic market share of 38%. With a workforce of 370 employees, it posted sales of 222.7 billion won, an operating profit (EBIT) of 17.1 billion won, and a net profit of 13.5 billion won in 2007.

Doosan will foster Tongmyung Mottrol as a stable revenue source, and create synergies in conjunction with Doosan Infracore and Bobcat, which was acquired last year, thereby developing Tongmyung as one of its new future growth engines.

Given the current robust status of the construction machinery market, the world-class technology of Tongmyung Mottrol, and Doosan’s domestic and overseas operating network and R&D capability, Doosan expects to maintain annual average growth of over 20%, enabling it - by 2011 - to post sales of 450 billion won and an operating profit of 50 billion, and to confidently secure global competitiveness.

A Doosan official said, “Doosan will nurture as its key portfolio the business of components and technology of Tongmyung Mottrol. As such, Doosan has been equipped with the capacity to pursue both profitability and growth when the company converts itself into a holding company together with its existing businesses in the brewing, publication, and electronics industries.” He went on to say, “Since the current business structure of Tongmyung Mottrol is very stable and offers good profitability prospects, there will be no artificial manpower restructuring, and we will minimize our seconded manpower, thus maintaining the current management system.”

In the meantime, Doosan will push for 4 weeks’ due diligence after signing the deal, and finalize the acquisition work in the first half of this year.