According to Bloomberg News, SK Innovation and SK E&S, the energy-related subsidiaries of SK Group, South Korea’s second-largest conglomerate, will merge.
Currently, SK Group is undergoing a major restructuring to boost its loss-making battery business.
, Photo source: SK On, on July 17, a document filed with the stock exchange showed that SK Innovation, the parent company of battery company SK On, will acquire SK E&S in an all-stock transaction, and the total assets of the combined company will reach approximately 100 trillion won (approximately US$73 billion).
Following shareholder approval, the merger is expected to be completed in November.
, In 2023, SK E&S’s sales were 11.
2 trillion won and operating profit was 1.
3 trillion won (US$939.
37 million).
In comparison, SK Innovation had sales of 77.
3 trillion won last year, but operating profit was only 1.
9 trillion won.
SK Innovation said in a filing with regulators,”This merger will improve the competitiveness of the energy business in the medium to long term and have a positive impact on the company’s profits and financial structure.
“, In addition, SK On’s board of directors said it has approved the company’s merger with SK Innovation’s two other subsidiaries, SK Trading International and SK Enterm, to improve the efficiency of raw material procurement, expand transactions, and help improve SK On’s profit structure.
SK On has not been profitable since it was spun off from SK Innovation at the end of 2021.
Recently, the company has been struggling to cope with declining shipments of electric vehicle batteries due to a slowdown in global electric vehicle sales.
, SK Group is undergoing a large-scale restructuring to save its loss-making business, and the merger of SK Innovation and SK E&S is only part of it.
Bloomberg reported that the merger reflects the huge challenges facing battery manufacturers as demand growth for electric vehicles slows and production capacity surges.
Park Ju-gun, head of Seoul’s corporate research firm Leaders Index, said the restructuring “serves a core goal, which is to save SK On.
” At this point, SK is making every effort to improve SK On’s financial performance.
This year alone, SK On will require huge capital expenditures of approximately 7 trillion won.
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