SK innovation, SK E&S boards to discuss merger plan

[Courtesy of SK Group]

SK innovation Co. and SK E&S Co, SK Group’s energy units, will hold respective board meetings on Wednesday to discuss a merger plan.

Industry insiders note that the merger, if realized, will lead to the creation of an energy giant with 106 trillion won ($77 billion) in assets as early as November.

SK Group has been in favor of the merger between SK innovation and SK E&S as part of a corporate re-balancing move.

The merger is expected to create synergies in the energy business and help cash-strapped SK on Co., an affiliate of SK innovation.

SK E&S is the group’s cash cow that can help improve SK innovation’s financial structure.

If the merger plan is approved by the respective boards, the companies plan to complete the merger process and launch the new entity as early as November. The merged entity will be founded as an in-house independent company (CIC) to ensure independence in business.

The entity will become a major player in the energy sector, with projected sales of nearly 90 trillion won and assets totaling 106 trillion won.

Given that SK E&S is a non-listed company, industry observers say the merger may face concerns from stakeholders, particularly from minority shareholders of SK innovation, about a merger ratio.

The ratio is expected to be set at 1 to 2 between SK innovation and SK E&S.