World's Largest Proxy Advisory Firm Supports SK Innovation-SK E&S Merger

Global proxy advisory firms such as ISS and Glass Lewis have recommended shareholder and investor support for the merger between SK Innovation and SK E&S. The merger scheduled for the 27th of this month is expected to gain momentum.

According to industry sources on the 14th, ISS and Glass Lewis, the world's largest global proxy advisory firms, recently expressed favorable opinions on the merger between SK Innovation and SK E&S in their proxy advisory reports. These two firms provide corporate proxy advisory services to more than 90% of institutional investors worldwide.

Both firms evaluated that the merger's purpose and expected effects are sufficient, stating that the merger will help create a stable profit structure to strengthen the financial structure while building a portfolio encompassing current and future energy. In particular, regarding the appropriateness of the merger ratio pointed out by some minority shareholders, they stated that "not only was the legally prescribed method followed, but the corporate valuation was also fair."

Specifically, Glass Lewis pointed out, "Since SK Innovation's market price has been trading significantly below its asset value since 2022, using the market price in this merger properly reflects SK Innovation's corporate value," adding, "If the merger ratio had been calculated based on SK Innovation's book value, the merger might not have proceeded due to objections from the counterparty."

ISS explained, "Considering the level at which domestic peers in the same industry are evaluated in the market, SK E&S's corporate value is sufficiently reasonable."

Glass Lewis stated that the merger between the two companies is expected to improve the profitability of the SK Innovation group and strengthen financial stability despite the uncertainties in the global business environment and the rapidly progressing energy transition. As an example, they cited that after the merger announcement, the global credit rating agency Standard & Poor's (S&P) upgraded SK Innovation's credit rating and outlook from 'BB+ Stable' to 'BB+ Credit Watch Positive.'