Chey Tae-won, chairman of SK Group.
Kiyoshi Ota/Bloomberg
smallEx-Korean billionaire Chey Tae-won’s SK Group is merging two energy units in a major overhaul to shore up the sprawling conglomerate’s finances after a deal spree in recent years.
SK Innovation, the parent company of EV battery maker SK On, will acquire energy subsidiary SK E&S in an all-stock deal, according to a Korean stock exchange filing on Wednesday. The combined company will have 100 trillion won ($72.4 billion) in total assets, making it the largest non-state energy company in the Asia-Pacific region, SK Innovation said in an investor presentation, ahead of companies such as Japan’s Eneos Holdings, Australia’s Woodside Energy and Indian billionaire Mukesh Ambani’s Reliance Industries.
Unlisted SK E&S, which operates in liquefied natural gas and renewable energy, is a cash cow for the SK Group. The energy company reported operating profit of 1.3 trillion won on revenue of 11.2 trillion won in 2023. The merger between SK Innovation and SK E&S will help shore up the finances of SK Innovation’s biggest loss-making business, SK On. The EV battery maker has said it is in crisis as its customers struggle with disappointing sales in Europe and the US. Financial Times reported earlier this month after posting losses since it was spun off from its parent company in 2021.
The merger will strengthen the financial and profit structure of the combined company by improving the competitiveness of its energy business, SK Innovation said in a press release. SK Innovation added that the agreement will strengthen the electrification efforts of SK Innovation and SK E&S, which has focused on distributed energy sources such as renewable energy and regional power enterprises.
Separately, SK On will merge with two other units of SK Innovation—crude oil products trading company SK Trading International and commercial terminal tank company SK Enterm—to strengthen its competitiveness in the raw materials market, according to the stock exchange filing .
The deals are the latest in SK Group’s long-awaited restructuring aimed at streamlining the operations of its more than 175 companies. South Korea’s second-largest conglomerate by assets after Samsung, SK Group has outlined plans to revive its businesses after its EV battery arm suffered heavy losses. SK Group said in June it plans to secure 80 trillion won by 2026 for investments in artificial intelligence and semiconductors, as well as shareholder returns.
At the same time, SK Group is selling non-core assets to focus on artificial intelligence. On Monday, SK Telecom was announced invested $200 million in SMART Global Holdings, a Nasdaq-listed artificial intelligence infrastructure developer. In August, SK Group’s telecom arm invested $100 million in OpenAI competitor Anthropic. And in April, SK Networks, the de facto AI investment arm of SK Group led Korean startup Upstage’s $72 million Series B round.
The merger between SK Innovation and SK E&S is expected to be completed in November, subject to shareholder approval. Both companies are controlled by SK Inc., the holding company of the SK Group.
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