![SK Innovation CEO Park Sang-kyu explains the background of the proposed merger with SK E&S Co. and future plans at SK Group's headquarters in Jongno, central Seoul, on July 18, 2024. (Image courtesy of Yonhap)](http://koreabizwire.com/wp/wp-content/uploads/2024/07/PYH2024071804040001300.jpg)
SK Innovation CEO Park Sang-kyu explains the background of the proposed merger with SK E&S Co. and future plans at SK Group’s headquarters in Jongno, central Seoul, on July 18, 2024. (Image courtesy of Yonhap)
SEOUL, Jul. 18 (Korea Bizwire) — The planned merger of SK Innovation Co. with energy affiliate SK E&S Co. is a “structural and fundamental” decision for sustainable growth amid growing uncertainties in the EV battery and petrochemical industries, SK Innovation’s chief executive said Thursday.
On Wednesday, the boards of SK Innovation and SK E&S approved the proposed merger, which will create the largest energy company in South Korea with combined assets of 106 trillion won (US$72.5 billion) and 88 trillion won in sales.
The merger ratio between SK Innovation, refiner and parent of SK Group’s battery maker SK On Co., and liquefied natural gas (LNG) provider SK E&S was set at 1 to 1.2.
“The merger plan is aimed at preemptively securing competitiveness and economies of scale for profitability amid geopolitical risks involving the petrochemical business and slowing sales of EVs,” SK Innovation Chief Executive Park Sang-kyu said in a press conference.
The integrated entity aims to become a total energy solutions provider to flexibly respond to changes in business environments surrounding the energy industry, he said.
In that vein, SK Innovation and SK E&S plan to form a task force team to maximize business synergies between them ahead of the planned launch of an integrated company on Nov. 1.
To finalize the merger plan, SK Innovation said it will hold a shareholders meeting on Aug. 27, while planning to issue new shares based on the merger ratio. The new shares are set to be listed on the country’s main bourse on Nov. 20.
The planned merger is part of the country’s second-largest conglomerate’s restructuring efforts amid a prolonged economic slowdown, growing uncertainties in the mainstay petrochemical business, and the EV “chasm.”
The global EV market is in a stagnation phase, known as the chasm, which occurs before the widespread adoption of all-electric vehicles.
The integrated entity aims to achieve 20 trillion won in earnings before interest, taxes, depreciation and amortization (EBITDA) in 2030, up from 6 trillion won in 2023, by focusing on growth drivers and profitability.
Meanwhile, SK Innovation’s board of directors also approved the integration among SK On, SK Trading International Co. and SK Enterm on Wednesday in a bid to keep SK On’s car battery business alive.
(Yonhap)