SK Innovation and SK E&S, two holding companies owned by Korean conglomerate SK Group, have reached a merger agreement, forming the largest private energy company in the Asia-Pacific (APAC) region.
The decision was made by SK Group to establish a robust growth foundation for its future energy businesses. The merger is expected to enhance the competitiveness of SK Group’s energy portfolio by integrating SK Innovation’s oil and battery businesses with SK E&S’ liquefied natural gas (LNG) and renewable energy businesses.
The merged company will aim to provide a comprehensive energy solution package tailored to global energy market demands.
The combined entity is set to launch on 1 November 2024. Its assets are expected to be worth 100trn won ($75bn) with revenues of 88trn won.
The agreement was ratified with an 85.75% approval rate from shareholders that attended the extraordinary general meeting. The merger required the consent of at least two-thirds of the attending shareholders as well as one-third of the total issued shares.
According to reports, the National Pension Service (NPS), the second-largest shareholder of SK Innovation, opposed the merger, citing risks to potential shareholder value.
SK Innovation CEO Park Sang-kyu commented: “We will do our utmost to ensure that this merger, which will serve as a foundation for the company’s long-term stability and growth, is carried out smoothly. Furthermore, we will actively review and implement various shareholder-friendly policies following the completion of the merger.”
In 2023, SK Innovation and SK E&S recorded an operating profit of 1.9trn won and 1.33trn won, respectively.
The two companies anticipate that by 2030, the synergies from the integration will add more than 2.1trn won to its earnings before interest, taxes, depreciation and amortisation (EBITDA), aiming for a total EBITDA of 20trn won.
SK Innovation was founded in 1962 as the first oil refining company in Korea. SK E&S was spun off from SK Innovation in 1999 as a city gas holding company.
