SK Innovation and SK E&S merge to become the largest private energy company in Asia Pacific

SK Innovation and SK E&S announced their merger decision to develop into a comprehensive energy company covering the entire value chain of existing energy (oil and LNG, etc.) and future energy (including renewable energy, hydrogen and SMR) as well as electrification businesses such as batteries and ESS.

The merged company will transform into a giant energy company with total assets of 100 trillion won and revenue of 88 trillion won, becoming the largest private energy company in Asia Pacific.

To achieve this goal, SK Innovation and SK E&S held separate board meetings on the 17th and approved the merger proposal. If the merger plan is approved at the shareholders' meeting on the 27th of next month, the merged company will be officially established on November 1st.

The merger ratio of the two companies is 1:1.1917417, calculated based on the enterprise value of SK Innovation and SK E&S. On this basis, SK Innovation, as a listed company, will issue 49,769,267 new shares to SK Inc., a shareholder of SK E&S. SK Innovation's new shares are expected to be listed on November 20, and after the merger, SK Inc.'s shareholding in SK Innovation is expected to increase from 36.22% to 55.9%.

On the same day, SK On, SK Trading International, and SK Enterm held their respective board meetings and decided to merge the three companies.

The two companies merged to actively respond to the rapidly changing external business environment, such as the continued global economic downturn, increased uncertainty in the energy and chemical fields, and the gap in the electric vehicle market, and to ensure competitiveness in the future energy business.

The two companies expect that by 2030, the synergy generated by the integration alone will increase EBITDA by more than 2.1 trillion won, and the goal is to reach a total EBITDA of 20 trillion won.

"The merger of the two companies represents a structural and fundamental innovation aimed at achieving sustainable growth by proactively responding to the changing environment of the energy industry," said Park Sang-kyu, CEO and president of SK Innovation. "Through this merger, SK Innovation will grow into a 'total energy and solutions company' that leads the Korean energy industry from now to the future."

"This merger will not only strengthen the existing business capabilities of both companies, but will also secure a growth engine for key energy businesses in the future," said Choo Hyeong-wook, CEO and president of SK E&S. "Based on the synergies generated by the merger, SK E&S will enhance its green portfolio centered on four core businesses and lead the future energy market."

SK Trading International, which approved the merger with SK On, is the only Korean company specialized in crude oil and petroleum products trading. And SK Enterm is Korea's largest commercial tank depot operator specializing in the storage and handling of petroleum cargoes.

Through the merger of the three companies, SK On will be able to further enhance its competitiveness in raw material security and ensure the sustainability of its business. In addition, SK Trading International will secure a future growth engine by entering new mineral trading fields such as lithium and nickel, while the merger with SK Enterm will provide the necessary storage capacity for its trading business. Most importantly, the merger of the three companies is expected to improve the profit structure by generating an additional 500 billion won in EBITDA from the trading and tank depot businesses.