SK Inno-SK E&S Merger Passes Major Hurdle... Subscription Amount Limited to 335 Billion Won

On the morning of July 18th, at the SK Seorin Building in Jongno-gu, Seoul, Park Sang-gyu, President of SK Innovation (first on the right), and Choo Hyung-wook, President of SK E&S (second on the right), attended a press conference related to the merger of SK Innovation and SK E&S.
[Photo by Yonhap News]

The scale of the exercise of the stock purchase rights, considered the final hurdle for the merger between SK Innovation and SK E&S, amounted to 335 billion KRW. The merger of the two companies, which is just two months away, is expected to proceed smoothly.

According to the Korea Securities Depository and SK Innovation on the 20th, the amount of stock purchase rights exercised by SK Innovation shareholders was 335 billion KRW. Although the final deadline for exercising stock purchase rights was the 19th, ordinary shareholders had to apply for the stock purchase rights two trading days in advance, effectively closing on the 13th.

The announced purchase price by SK Innovation (111,943 KRW) and the closing price of SK Innovation on the 13th (110,700 KRW) differed by only 1.1%. With overseas advisory firms' assessments of synergy after the merger and positive reports from domestic securities firms, the majority of shareholders appear not to have exercised their stock purchase rights.

The actual scale of stock purchase rights exercised was less than half of the 800 billion KRW limit set by SK Innovation. Previously, at the extraordinary general meeting held on the 27th of last month, the merger agenda between SK Innovation and SK E&S was approved with an 85.75% approval rate from attending shareholders. At that time, the approval rate among foreign shareholders was 95%. This supported the potential for enhancing corporate value through the merger of the two companies.

SK Innovation and SK E&S will become the largest private energy company in the Asia-Pacific region with sales of 88 trillion KRW and assets of 100 trillion KRW as of November 1.

Recently, the two companies formed an integrated synergy promotion team led by Hyungwook Choo, CEO of SK E&S. They plan to organically link SK Innovation’s oil and battery businesses with SK E&S’s liquefied natural gas (LNG) and renewable energy core businesses to create a blueprint for growth as a 'total energy and solution company.' SK Innovation expects synergy effects from the merger alone to exceed 2.2 trillion KRW in EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) by 2030, with a target of achieving a total EBITDA of 20 trillion KRW.

An SK Innovation official stated, "We will achieve portfolio competitiveness and financial structure stabilization through value-up based on integrated synergy," adding, "We will actively implement the shareholder return policy previously promised to align with the government’s value-up policy and, after the merger stabilization period, execute more diverse shareholder-friendly policies to meet shareholders’ expectations."