SK Innovation's Seorin Building in Seoul. [SK]
SK Innovation's Seorin Building in Seoul. [SK]

SK Innovation and SKIET each held board meetings Tuesday and approved a resolution to pursue a merger between the two companies.

The plan calls for integrating SKIET's separator business into parent company SK Innovation to secure financial stability, with the goal of strengthening the separator business's medium- to long-term competitiveness and enhancing shareholder value.

The merger will take the form of SK Innovation absorbing SKIET. SK Innovation, as the surviving entity, will proceed under a small-scale merger process, while SKIET, as the dissolving entity, will follow standard merger procedures. SK Innovation will issue new shares and distribute them to SKIET shareholders.

The merger ratio is set at 1 to 0.1174540, calculated from the arithmetic average of each company's one-month and one-week volume-weighted average closing prices and the most recent closing price, in accordance with the Capital Markets Act and related regulations. Under this ratio, SKIET shareholders will receive 0.11 SK Innovation common shares for every one SKIET common share they hold.

The two companies plan to obtain merger approval at SK Innovation's board meeting and SKIET's shareholder meeting on Nov. 24, then complete the necessary procedures with Jan. 1 next year as the effective merger date. New SK Innovation shares issued as a result of the merger are set to be listed on Jan. 18 next year. Because SK Innovation is proceeding under the small-scale merger process, the appraisal rights exercise procedure will be omitted and board approval will substitute for a shareholder vote.

SKIET was established in April 2019 through a physical spin-off of SK Innovation's materials business and listed on Kospi in May 2021. The company has built a global presence in the secondary battery separator segment, leveraging its production capabilities in lithium-ion battery separators (LiBS), a key material for electric vehicle batteries.

However, the business environment has grown considerably more difficult since the spin-off, with slowing growth in the global electric vehicle market and intensifying price competition as Chinese rivals enter global markets. As a result, the company faces limited near-term prospects for improving profitability and cash generation, and its capacity for self-financing remains constrained.

SK Innovation concluded that merging SKIET into the parent company — rather than maintaining it as an independent entity — would more effectively resolve business and financial risks and enhance competitiveness, leading to the decision to pursue the merger.

The merger is expected to combine SK Innovation's research and development capabilities with SKIET's product development expertise, strengthening competitiveness in areas such as expanding the separator business for ESS applications.

"Through the merger, we plan to strengthen financial stability and streamline our business structure, and use that as a foundation to enhance the separator business's medium- to long-term competitiveness," an SK Innovation official said. "We will do our utmost to ensure this merger leads to a recovery in business competitiveness and an improvement in shareholder value."


yeongdai@heraldcorp.com