Seoul: SK Innovation Co., South Korea's leading oil refiner, has announced a comprehensive business reorganization plan, which includes the merger of two electric vehicle (EV)-related affiliates, as part of its strategic response to slowing EV sales. SK On Co., the company's EV battery manufacturing unit, is set to absorb SK Enmove Co., a provider of EV lubricants and thermal management solutions, with the new entity slated to launch on November 1.
According to Yonhap News Agency, the merger aims to create synergies in the electrification sector and improve cost efficiency in logistics, as highlighted by SK Innovation Executive President Jang Yong-ho during a press conference. This strategic move is a component of the company's broader restructuring efforts, which include raising a total of 8 trillion won (approximately US$5.8 billion) through share and bond sales this year to enhance financial efficiency.
As part of these efforts, SK Innovation plans to issue 18 million common shares at 111,000 won each, aiming to raise 1.99 trillion won for debt repayment. The company expects to secure 3 trillion won of the planned capital by the end of the year. Additionally, SK On and SK ie technology Co. (SKIET) intend to raise 2 trillion won and 300 billion won, respectively, through share offerings.
To strengthen its control over SK On, SK Innovation will acquire 1.08 million shares in the battery maker from financial investors for 3.58 trillion won on October 31, increasing its stake in SK On to 90.3 percent from the current 86.98 percent. Alongside the fundraising plan, SK Innovation aims to divest non-core assets to reduce debt by over 1.5 trillion won within the year.
The restructuring is part of SK Innovation's goal to achieve 20 trillion won in earnings before interest, taxes, depreciation, and amortization (EBITDA) by 2030, while reducing its debt to below 20 trillion won. Although the company did not disclose its current EBITDA or debt levels, the plan reflects its commitment to becoming a financially sound, top-tier company.
Last year, SK Innovation merged with SK E and S Co. to enhance the competitiveness of its energy portfolio by integrating its oil and battery businesses with SK E and S's liquefied natural gas (LNG) and renewable energy operations. This merger was part of larger restructuring efforts by SK Group, South Korea's second-largest conglomerate, amid prolonged economic challenges, uncertainty in the petrochemical sector, and the global EV market's stagnation phase, often referred to as the "chasm."