SK Innovation and SK E&S, two subsidiaries of the Korean conglomerate SK Group, have agreed to merge, creating the largest private energy company in the Asia-Pacific region. This strategic move by SK Group aims to establish a solid foundation for future growth in its energy businesses.
The merger, set to be finalized on 1 November 2024, will integrate SK Innovation’s oil and battery operations with SK E&S’s liquefied natural gas (LNG) and renewable energy businesses. The combined entity is expected to provide comprehensive energy solutions tailored to global market demands. Post-merger, the company’s assets are projected to be worth 100 trillion won ($75 billion), with expected revenues of 88 trillion won.
The merger was approved by 85.75% of shareholders at an extraordinary general meeting, surpassing the requirement of two-thirds approval from attending shareholders and one-third of the total issued shares. Despite the support, the National Pension Service (NPS), the second-largest shareholder of SK Innovation, opposed the merger due to concerns over potential risks to shareholder value.
In 2023, SK Innovation and SK E&S reported operating profits of 1.9 trillion won and 1.33 trillion won, respectively. By 2030, the companies anticipate that the merger will generate more than 2.1 trillion won in additional EBITDA, aiming for a total EBITDA of 20 trillion won.
SK Innovation, established in 1962, was Korea’s first oil refining company. SK E&S, initially part of SK Innovation, was spun off in 1999 as a city gas holding company.