Doosan Bobcat Withdraws $2.2 Billion IPO to Revise Offering

  • Too many shares, too high price, says Yuanta analyst Lee
  • Withdrawal comes after Hotel Lotte pulled back in June

Doosan Bobcat Inc., a unit of South Korea’s biggest construction equipment maker, withdrew its bid to sell shares in what would have been the country’s biggest initial public offering in more than six years amid concerns that the sale price was too high.

The company will withdraw its proposal to raise as much as 2.45 trillion won ($2.2 billion) and will submit a revised plan soon, Doosan Infracore Co., the biggest shareholder of Doosan Bobcat, said in a regulatory filing in Seoul Monday. It expects to list shares in November or January, instead of its earlier planned Oct. 21, the company said in an e-mailed statement.

“There were concerns that the IPO was priced too high and there were too many shares being sold,” said Lee Jae Won, an analyst at Yuanta Securities Korea Co. in Seoul. “The stock market has been trading in a narrow range these past few years, so investors are wary about any stock that’s offered at what they believe is a high valuation.”

It’s the second pull back of an IPO in South Korea, which had the second-worst performance of listings among major Asian bourses. In June, Hotel Lotte Co. dropped its 5.26 trillion won offering even after lowering the sale price.

Doosan Infracore fell 7.2 percent, the most since June, to close at 7,200 won in Seoul trading. Doosan Engine Co., the world’s second-biggest maker of ship engines and a shareholder of Doosan Bobcat, dropped 11 percent to 3,630 won, the largest decline in almost a year.

Too Many

“There were too many shares being offered and a few issues that didn’t meet market conditions,” Doosan Bobcat said in the statement. “While there was demand, we were unable to come to an accord that satisfied those involved. In that respect, we will re-look at the IPO structure, including the number of shares, to fit the market conditions and proceed with the IPO again.”

Shareholders of Doosan Bobcat had offered about 49 million existing shares at 41,000 won to 50,000 won apiece. Doosan Infracore, Doosan Engine Co. and other investors planned to sell some of their shareholdings in the IPO.

The Seoul-based company, which got about 70 percent of its sales of 4.04 trillion won last year from North America, has been seeking to expand in emerging markets including China and Latin America, to generate more growth opportunities.

Sale Arrangers

Korea Investment & Securities Co. and JPMorgan Chase & Co. are leading the offering. Credit Suisse Group AG, HSBC Holdings Plc, Hanwha Investment & Securities Co. and Shinyoung Securities Co. are also helping arrange the share sale.

Doosan Infracore bought Ingersoll-Rand Co.’s Bobcat business and other equipment units in 2007 for $4.9 billion, the biggest overseas deal by a South Korean company. Doosan Bobcat posted 234.8 billion won in operating profit in the first half of this year and generated sales of 2.15 trillion won, the company said. Its operating margins widened to 10.92 percent in the first half, from 9.54 percent for 2015.

The company pursued a listing after South Korean policy makers revised IPO rules late last year. The regulator loosened documentation requirements for Korean companies with businesses abroad, making it easier for firms like Doosan Bobcat that have many overseas units.

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