Doosan Engineering & Construction has taken over Doosan Mecatec, the world’s No.1 producer of Chemical Process Equipment.

Doosan E&C and Doosan Mecatec held their respective board of directors’ meetings on August 17, and agreed on the former’s acquisition of the latter to increase corporate value, improve profitability, and maximize shareholder value by generating synergistic effects.

The ratio of the merger has been set at 1 to 4.13 for Doosan E&C and Doosan Mecatec (4.13 Doosan E&C shares swapped per one Doosan Mecatec share) according to an independent accounting firm's evaluation. The merger will most likely take place in early November. Doosan E&C recorded US$ 1.9 billion in annual sales in 2009, while Doosan Mecatec posted sales of US$ 483 million.

Following the merger, Doosan E&C aims to become a “global builder of infrastructure and plant with annual sales of US$ 4.2 billion by 2013” by integrating Doosan Mecatec’s plant engineering capacity, including its chemical engineering and power plants, and ample overseas networks, into its own civil engineering capacity.

Notably, Doosan E&C’s construction capacity, and its capability in environmental and energy plant, is expected to combine with Doosan Mecatec’s capability in chemical engineering, energy and industrial plant engineering to generate synergistic effects in the plant sector.

Through this merger, Doosan E&C will also improve its financial soundness and increase its liquidity, as the company will come to possess cash reserves and cash-like assets of around US$ 600 million. The company’s debt ratio, which stood at the 290-percent level as of late June, will fall to around 220 percent immediately after the merger. The builder plans to further lower the debt ratio to about 130 percent in 2013.

Additionally, the portion of Doosan E&C’s housing business will decline from 64 percent before the merger to 41 percent next year. The portions of the company’s plant and overseas businesses will likely increase to 22 percent and 16 percent, respectively, for next year.

Kidong Kim, President of Doosan E&C, commented, “The merger will allow Doosan E&C to see diverse benefits, including the expansion of overall sales to meet its status as one of Korea’s ten largest builders, and an increase in capital; the construction of a stable business structure in the housing, civil engineering and plant sectors; the laying of foundations for its advance into overseas plant markets; and the enhancement of its financial soundness.” He added, “Expanding from the domestic housing market, which has been suffering recently from a deep slump, the company will seek to take a great leap towards becoming a global builder of infrastructure and plant engineering.”