Shareholders approve SK innovation, SK E&S merger

Courtesy of SK innovation

The merger between SK innovation Co. and SK E&S Co. was approved by respective shareholders on Tuesday, paving the way for the launch of the largest private energy company in the Asia-Pacific region.

The new entity, which is set to officially launch on November 1, will have assets totaling 100 trillion won ($75.2 billion).

SK innovation announced on Tuesday that 85.75 percent of shareholders who attended the ad-hoc meeting approved the merger plan.

The meeting was attended by 62.76 percent of the entire shareholders, including proxy votes.

SK E&S also held its shareholder meeting on Tuesday and approved the plan.

The merger required a special resolution, needing approval from two-thirds of the shareholders present and at least one-third of the total issued shares.

With proxy advisory firms Institutional Shareholder Services Inc. and Glass Lewis & Co. backing the merger, 95 percent of foreign shareholders in attendance voted in favor of the plan.

Following the approvals, SK innovation will absorb SK E&S effective November 1.

“We will make every effort to ensure that this merger is successfully completed and lay the foundation for the company‘s long-term stability and growth,” said SK innovation CEO Park Sang-kyu.

He also mentioned plans to implement various shareholder-friendly policies following the merger.

The boards of both companies had approved the merger in mid-July. Valued at 10.8 trillion won for SK innovation and 6.2 trillion won for SK E&S, the merger involves an exchange ratio of 1.19 shares of SK innovation for each share of SK E&S.

Post-merger, SK innovation is expected to become the largest private energy company in the Asia-Pacific region, with assets of about 100 trillion won and revenue of around 88 trillion won.

The merger is expected to bolster the company’s energy portfolio by combining SK innovation‘s petroleum and battery businesses with SK E&S’s liquefied natural gas (LNG) and renewable energy assets.

The integrated SK innovation aims to become a comprehensive energy solution provider, with a focus on electrification.

The merger is also expected to improve financial stability, with a target earnings before interest tax depreciation amortization (EBITDA) of 20 trillion won by 2030.

SK Inc., the holding company of SK Group, anticipates increased shareholder returns as SK innovation evolves into a full-spectrum energy company covering the entire energy and electrification value chain.

The final step in the merger process is the exercise of appraisal rights, which began on Tuesday and will continue until September 19.

The estimated price of 111,943 won per share applied to the 8,244,401 shares voting against the merger totals 922.9 billion won. Assuming that all dissenting shareholders exercise their appraisal rights, the total amount required by SK innovation may exceed the 800 billion won limit.

SK innovation has assured that with over 1.4 trillion won in cash reserves, it can manage the costs associated with appraisal rights.

“The limit was set based on past merger cases,” Park said. “If the amount exceeds the limit, we will decide on the course of action in consultation with the board of directors.”