S&P: "SK Inno and SK E&S Merger Positively Impacts Long-Term... Eases Facility Investment Burden"

S&P evaluated that the merger of SK Innovation and SK E&S will help alleviate the burden of facility investments in the long term.

On the 23rd, S&P explained, "Considering that the adjusted debt-to-EBITDA ratio of SK Innovation and SK E&S for 2024-2025 is at a high level of about 4 to 5 times, the immediate financial impact of the merger between the two companies is limited."

It added, "From a long-term perspective, this merger can have a positive effect on SK Innovation," noting that "the business scale and portfolio will expand, and cash flow volatility may decrease."

Earlier, on the 17th, SK Innovation and SK E&S held a board meeting and approved the merger plan. If the merger plan is approved at the shareholders' meeting on the 27th of next month, the merged entity will officially launch on November 1.

S&P also assessed that "the stable surplus operating cash flow of SK E&S can be used as an investment resource for SK Innovation, which requires large-scale facility investments."

Furthermore, S&P designated SK Innovation's 'BB+' long-term issuer credit rating as 'positive watch' and SK E&S's 'BBB-' long-term issuer credit rating as 'negative watch.' S&P stated, "Once the merger is completed, we plan to comprehensively review the credit rating of the merged company and the influence of the group, and then remove the related companies from the watch list."