2025.07.30
Strategic Business and Financial Rebalancing to Emerge as a Top-Tier Energy Company in the Electrification Era
■ The boards of directors of each company have approved the merger plan, aiming to strengthen the financial structure and create synergies, establishing a solid foundation for SK On’s independent growth.
■ Significant capital funding will enhance financial stability, with plans to raise KRW 8 trillion in capital and optimize KRW 1.5 trillion in assets by 2025.
■ SK Innovation aims to maximize shareholder value by achieving KRW 20 trillion in EBITDA and maintaining net debt below KRW 20 trillion by 2030.
SK Innovation has announced the merger of SK On, its electric vehicle battery subsidiary, with SK Enmove, known for lubricants and immersion cooling solutions, alongside a major capital expansion initiative.
This business and financial restructuring is part of SK Innovation’s strategy to become a leading total energy company with top-tier competitiveness in the future era of electrification.
On July 30th, the boards of SK Innovation, SK On, and SK Enmove convened to approve the merger of SK On and SK Enmove.
As a result, SK On will absorb SK Enmove, with the newly merged entity officially launching on November 1st.
Additionally, the boards of SK Innovation and SK On approved a resolution for a large-scale capital increase through third-party allotment, marking a proactive step in capital financing.
Executive President of SK Innovation, Jang Yong-ho, along with SK On CEO Lee Seok-hee, held a strategy briefing on enhancing corporate value at SK Seorin Building in Jongno-gu, Seoul.
They unveiled strategic goals, including achieving an EBITDA of KRW 20 trillion by 2030.
Merger of SK On and SK Enmove to Bolster Competitiveness and Accelerate Growth in Electrification Business
SK Innovation is pursuing the merger of SK On and SK Enmove to enhance competitiveness and accelerate growth in its electrification business, a key driver of future growth.
This merger is expected to generate additional revenue through synergies between the two companies’ customers and businesses, while significantly strengthening financial stability.
As a result of the merger, SK On anticipates an immediate improvement in its financial structure, with an expected capital increase of KRW 1.7 trillion and an EBITDA boost of KRW 800 billion this year.
SK Innovation projects that business synergies will generate an additional EBITDA of over KRW 200 billion by 2030.
Specifically, SK On’s core business areas, such as electric vehicle (EV) batteries and energy storage system (ESS) batteries, alongside SK Enmove’s base oil, lubricants, immersion cooling, and EV air conditioning refrigerants, are expected to benefit from leveraging the same customer base and cross-selling products, thereby increasing revenue.
Additionally, the merger is anticipated to facilitate entry into new markets and business expansion, such as package solutions combining immersion cooling and batteries.
SK On aims to ensure stable growth and financial soundness based on this profitability, with strategic goals to generate over KRW 10 trillion in EBITDA by 2030 and reduce its debt ratio to below 100%.
Lee Seok-hee, CEO of SK On, stated, “With the expected synergies from the merger, including the integration of both companies’ technological and business capabilities, we anticipate showcasing a higher level of competitiveness in the global market.”
SK Innovation to Achieve Top-Tier Financial Stability Through Major Capital Expansion and Asset Optimization
SK Innovation is proactively strengthening its financial stability by significantly reducing net debt through substantial capital raising.
Firstly, SK Innovation plans to raise a total of KRW 8 trillion in capital this year.
This includes KRW 2 trillion from SK Innovation’s third-party allotment, KRW 700 billion from issuing perpetual bonds, KRW 2 trillion from SK On’s third-party allotment, and KRW 300 billion from SK IE Technology (SKIET)’s capital injection, amounting to a capital expansion of KRW 5 trillion.
Additionally, SK Innovation announced plans for an additional capital expansion of KRW 3 trillion by the end of the year.
SK Inc. has participated in SK Innovation’s KRW 2 trillion capital increase.
The company directly invested KRW 400 billion in SK Innovation and committed to Price Return Swap (PRS) agreements with multiple financial institutions to secure the remaining KRW 1.6 trillion.
An SK Inc. representative stated, “At this critical juncture of SK Innovation’s transition to a future portfolio, we participated in the capital expansion to secure financial stability, thereby accelerating profit and growth.
By enhancing the value of SK Innovation, a key subsidiary, we can ultimately maximize long-term benefits for all shareholders of the holding company.
On the other hand, SK Innovation has also entered into PRS agreements to secure SK On’s KRW 2 trillion and SKIET’s KRW 300 billion capital increases, with participation from financial institutions.
Both companies plan to use the raised funds as operating capital.
PRS is a derivative instrument that settles gains or losses based on stock price fluctuations post-investment, effectively utilizing external investment funds to reduce company resource outflows.
SK Innovation has decided to purchase all convertible preferred shares of SK On held by financial investors (FI) for KRW 3.588 trillion.
Earlier this month, SK Innovation purchased all 12 million shares of SK Enmove owned by FIs.
Simultaneously, the company is embarking on comprehensive asset optimization. SK Innovation plans to reduce its debt by over KRW 1.5 trillion this year through the sale and liquidation of non-core assets.
This capital expansion and asset optimization are projected to collectively reduce SK Innovation’s net debt by over KRW 9.5 trillion this year.
Jang Yong-ho, Executive President of SK Innovation, stated, “Through this dual-track business and financial portfolio rebalancing, we aim to improve EBITDA and reduce net debt to achieve top-tier financial stability domestically.”
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