Doosan Shines in M&As

Chairman Park of Doosan Infracore says preparation is key to success in M&As

Chairman Park Yong-man of Doosan Infracore is not an ordinary business executive in Korea because he is preoccupied with overseas M&As -- his wish list is dominated by foreign companies.
Doosan Group's total turnover amounted to 18.6 trillion won last year and most of it came from companies secured through M&As. Park envisions the group's total turnover to reach 100 trillion won by 2015, a considerable portion from companies acquired through M&As.
Doosan is noted for surviving the financial crisis without the support of public funds and, after the crisis was over, the group took over such giant companies as Korea Heavy Industries and Daewoo Machinery to change the group's main business lines from beverages and construction to heavy machinery and equipment.
The chairman, who took over the management of Doosan Infracore at the end of last year, said the company does not go for M&As just because of a desire to expand the business territory and take a gamble.
Rather, he said, they go for the acquisition of a company for its products, core technologies, network and productivity for fair prices to give more speed to the management structure. "It's impossible to gain global dominance with a newly developed product because it is always the leader who runs faster than the follower,"he said, adding, "the only way to catch up is to take over a company with many resources."Asked if he is satisfied with the takeover of Bobcat, the chairman said Doosan is strong in China, while Bobcat has been running very well in the United States. It would take some 20 years for Doosan to operate like Bobcat in the U.S.
construction equipment market and it would take some 10 years for Bobcat to catch up with Doosan in China. But it took only six months through the takeover.
"Bobcat did well last year, despite the subprime mortgage loan problems, and the company met its targets in the first two months of this year,"Park said. Synergies are created with Bobcat and Doosan affiliates in other markets, and are not a cause of concern.Doosan paid $4.9 billion for Bobcat and had very little problem securing funding.
"To be successful in M&As, it takes good preparation, as the success or failure depends on how ready you are. The easiest thing is writing in the price. You must know what you want out of the target company, what effect it will have inside the company and the market and the reaction of competitors,"he said.
After the acquisition is completed,
the company should send as few of its own people as possible to help run the newly acquired company. He said the group sent only 10 officials to Korea Heavy Industries after acquiring it, although the company had some 7,000 employees. The group sent only six employees including two managers to Bobcat. Key personnel to run the company were selected among the local executives and employees through Doosan's people program.
On managing the acquired overseas companies, he said sometimes he can hardly sleep at night because he makes calls to local executives to discuss certain issues in management. He talks to local executives first and then calls Doosan people regarding certain management decisions.
It took Doosan between 4 and 5 years to prepare a team of 10 for their M&As. They coordinate the M&A matters with top group leaders and core experts before making final decisions. The team handled some 20 cases of M&As without difficulties. Doosan consults Mackenzie for strategies and readjustment mechanics Boston Consulting Group as it has been doing over a past decade.
Doosan's strength in M&As came from its sales of a number of affiliates including Kodak's local operation, Coca Cola Bottling and OB Beer just before the financial crisis in 1998. nw

Chairman Park Yong-man of Doosan Infracore

The latest machine tools on display at the Doosan Infracore Pavilion of SIMTOS 2008 held recently in Korea.