Doosan Wants Top Three Status

The Financial Times reports that South Korean Doosan Infracore hopes to become one of the top three global players by 2012 instead of its current seventh ranking. However, following its $4.9 billion acquisition of Bobcat and two other units of Ingersoll-Rand, they have faced mounting concerns about their financial health in recent months, especially as business at Bobcat deteriorates amid the deepening problems of the U.S. economy.

Shares of Doosan have fallen more than 30% this year on investors’ fear that they overpaid for the Bobcat deal, which could create problems funding further acquisitions, according to the article. The company has announced a $1 billion rights offering through the first half of next year to pay back part of the $2.9 billion it borrowed to fund the Bobcat acquisition, in hopes of calming investors jitters. The company has also dropped out of the bidding for Daewoo Shipbuilding and Marine Engineering.

Doosan is fully aware of scepticism about the Bobcat deal, but remains confident that the acquisition is essential for the company to become a global player and the long- term synergies would justify its acquisition cost, a company spokesperson said. Bobcat reported a 1.6% rise, at $1.5 billion, in first-half sales, despite a 9% fall in global demand for construction machinery. But its sales are forecast to fall 0.4% to $2.9 billion for the full year.