Shareholders approve SK Innovation and SK E&S merger, creating $80 billion energy giant

The merger of SK Innovation and SK E&S was approved with a sweeping 85.76 percent consensus at SK Innovation's shareholder meeting on Tuesday.

SK Innovation headquarters [NEWS1]

The merger of SK Innovation and SK E&S was approved with a sweeping 85.76 percent consensus at SK Innovation's shareholder meeting on Tuesday.

SK E&S shareholders also approved the merger.

SK Innovation held an extraordinary shareholder meeting on Tuesday to vote on the merger of the two energy affiliates, with a merging ratio of 1 to 1.19.

"We will try our best to complete the merger deal that will be the basis for the company's long-term stability and growth," SK Innovation CEO Park Sang-kyu said.

"We will actively look into various shareholder-friendly policies after the deal closes."

The approval was largely expected, as SK Inc. holds 36.2 percent of SK Innovation, which single-handedly met the one-third threshold of votes required to pass the agenda item.

The National Pension Service (NPS), the second-biggest shareholder of SK Innovation with a 6.2 percent stake, opposed to the merger, contending that the deal goes "against shareholder interests," but could not influence the result.

Backing by ISS and Glass Lewis, two of which are global proxy advisers, is also believed to have swayed foreign investors. The two firms evaluated that the merger deal would help the companies in question set up a more stable earnings structure and strengthen their financial structure.

SK Innovation said Tuesday that 95 percent of its foreign investors voted in favor of the merger.

The merger is expected to be the largest restructuring at SK Group in two decades. The deal was designed to salvage money-losing SK On, the EV battery subsidiary of SK Innovation, which hasn't posted profit once since it split off from the parent company in 2021.

SK E&S, on the other hand, is a cash cow within SK Group, dedicated to liquefied natural gas and other forms of renewable energy. It recorded 1.3 trillion won ($974 million) in operating profit last year.

The merger is expected to establish an energy giant with an asset value of 106 trillion won. It aims to post 20 trillion won in earnings before interest, taxes, depreciation and amortization by 2030.

The new entity will launch on Nov. 1.

SK Innovation shares closed at 109,800 won on Tuesday, up 3.1 percent compared to the previous trading day.

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]