SK Innovation, SK E&S boards approve merger to create energy giant in S. Korea

The boards of SK Innovation Co. and SK E&S Co., two major energy affiliates of SK Group, approved a proposed merger of the two companies Wednesday, creating the largest energy entity in South Korea with combined assets of 106 trillion won (US$76.5 billion).

In their separate board meetings earlier in the day, the directors gave approval to the plan to merge SK Innovation, SK Group’s energy subholding company, and SK E&S, a privately owned recycled energy firm.

The integration will be finalized at an emergency shareholders’ meeting next month, with the combined entity expected to be launched as early as November, according to sources.

The merger of SK Group’s two major energy affiliates is part of South Korea’s second-largest conglomerate’s restructuring efforts aimed at strengthening its energy business and providing financial support to SK Innovation’s battery subsidiary, SK On Co.

Subsequently, SK Corp., their largest shareholder and SK Group’s holding company, will hold a board meeting the next day to discuss the merger.

As of the end of March, SK Corp. owned a 36 percent stake in SK Innovation and a 90 percent stake in SK E&S.

SK E&S operates in energy sectors, including liquefied natural gas (LNG), hydrogen and renewable energy, with sales of 11.2 trillion won and an operating income of 1.3 trillion won last year.

Meanwhile, SK Innovation is considering integrating SK On with other energy-related affiliates, including SK Trading International Co., as a way to strengthen the battery maker’s competitiveness.