As part of a business restructuring effort, SK Group has been pushing for a merger between SK Innovation, the energy intermediate holding company, and SK E&S, which is considered a valuable unlisted company.
The initiative is aimed at strengthening synergies in the energy business of South Korea's second-largest conglomerate while alleviating the financial difficulties of SK On, a subsidiary of SK Innovation, by leveraging the strong financial performance of SK E&S.
If approved by the boards, the companies will then proceed with subsequent steps, including an extraordinary general meeting of shareholders for merger approval in August.
Depending on the discussions, SK Group’s holding company, SK Inc., which is the largest shareholder of both companies, is also planning to hold a board meeting Thursday to discuss the merger proposal.
As of the end of March, SK Inc. held a 36.22 percent stake in SK Innovation and a 90 percent stake in SK E&S.
SK E&S is an energy subsidiary involved in businesses such as liquefied natural gas (LNG), hydrogen and renewable energy, recording 11.2 trillion won ($8.8 billion) in revenue and 1.3 trillion won in operating profit in 2023.
However, as SK E&S is an unlisted company, there may be opposition from stakeholders such as minority shareholders of SK Innovation, depending on the merger ratio.
Industry observers expect SK Innovation and SK E&S to merge at a ratio of about 1:2.
SK Innovation is also pursuing a plan to enhance the competitiveness of SK On by merging it with SK Trading International, a crude oil and petroleum product trading company, and SK Enterm, which operates SK Energy's tank terminal business.
