SK innovation pushes for subsidiaries merger

[Courtesy of SK on Co.]

SK innovation Co. is pushing for a merger between its subsidiaries in the battery and petroleum sectors to improve the financial health of its battery subsidiary, SK on Co., and streamline its organizational structure.

Industry sources reported on Monday that SK Innovation, which currently has nine subsidiaries, will hold a board meeting on Wednesday to discuss the merger plan involving SK on, SK trading international Co., and SK enterm Co. During the scheduled board meeting, a plan to merge SK innovation, SK Group’s core energy arm, with SK E&S Co. into an independent in-house company, or “company-in-company,” will be reviewed.

Observers and SK Group believe that the merger of SK innovation and SK E&S, which will create a major energy company with assets exceeding 100 trillion won ($72.2 billion), is expected to enhance financial support for SK on. There has also been a growing internal call to consolidate the group’s core capabilities to support the battery company. SK on reported sales of 1.68 trillion won and an operating loss of 331.5 billion won in the first quarter of 2024, its tenth consecutive quarter of losses.

SK trading international, which is set to merge with SK on, is a global trading company responsible for importing crude oil and exporting petroleum products for SK energy Co. and SK incheon petrochem Co. Established in 2013, it is wholly owned by SK innovation. It recorded sales of 48.96 trillion won and an operating profit of 574.6 billion won in 2023 to pay a dividend of 800 billion won to SK innovation, or around 70 percent of the total dividend.

SK enterm, launched earlier in 2024 with the tank terminal business that was spun off from SK energy, is a specialized energy storage company generating stable profits. It has a steady revenue from internal transactions with affiliated companies and is exploring growth opportunities in the eco-friendly energy sector, including sustainable aviation fuel. SK enterm, a 100 percent subsidiary of SK innovation, recorded sales of 257.6 billion won in 2023.

“This merger plan aims to provide financial support to SK on while minimizing redundant personnel and streamlining the affiliates,” an SK Group official said. “It will serve as a cornerstone in reshaping SK Group’s energy business blueprint.”