SK On and SK Enmove to Merge... SK Innovation to Rebalance Business and Financial Structure

Pursuing Electrification Competitiveness and Financial Stability Simultaneously

SK Innovation has officially announced the merger of its electric vehicle battery subsidiary, SK On, with its lubricants and immersion cooling subsidiary, SK Enmove. At the same time, SK Innovation will carry out large-scale capital increases across SK Innovation, SK On, and SKIET, aiming to simultaneously restructure its business around electrification and enhance financial stability.

SK Innovation headquarters located in SK Seorin Building, Jongno-gu, Seoul. Photo by Kang Jinhyung

On July 30, SK Innovation, SK On, and SK Enmove each held board meetings and resolved that SK On will absorb SK Enmove through a merger. The merger is scheduled to take effect on November 1. SK Innovation stated, "We are pursuing the merger of SK On and SK Enmove to secure competitiveness and accelerate growth in the electrification business, which is our key future growth engine." The company added, "This merger is expected to generate additional revenue through synergies between the customers and businesses of both companies, and to further strengthen financial soundness."

Through this merger, SK On plans to enter new package solution markets by combining its existing electric vehicle battery and ESS businesses with SK Enmove's immersion cooling and lubricant technologies. The two companies will also begin full-scale cross-selling of products by leveraging their global OEM customer base and distribution networks. They expect immediate financial improvement, with capital increasing by KRW 1.7 trillion and EBITDA rising by KRW 800 billion this year. Their targets include generating over KRW 10 trillion in EBITDA and achieving a debt ratio of less than 100% by 2030.

Alongside the merger, SK Innovation will proactively raise capital through a total of KRW 8 trillion in rights offerings and perpetual bond issuances, as well as capital increases for subsidiaries SK On and SKIET. Specifically, SK Innovation will pursue a KRW 2 trillion rights offering and KRW 700 billion in perpetual bonds, SK On will raise KRW 2 trillion, and SK IE Technology (SKIET) will raise KRW 300 billion through rights offerings. SK Inc. will directly participate in SK Innovation's rights offering and support fundraising by entering into a price return swap (PRS) agreement for third-party allocations.

On the financial front, comprehensive asset securitization will also take place. SK Innovation has set a goal to reduce net debt by more than KRW 9.5 trillion by the end of the year, including the sale of non-core assets worth KRW 1.5 trillion within this year.Separately, the company will acquire all of the convertible preferred shares in SK On held by financial investors (FI) for KRW 3.588 trillion to stabilize its equity structure.

Jang Yongho, President of SK Innovation, stated, "Through this two-pronged portfolio rebalancing of business and financial structures, we will improve EBITDA and reduce net debt, thereby achieving top-tier financial soundness in Korea."

Previously, SK Innovation merged with SK E&S in November last year, and SK On completed business structure rebalancing by merging with SK Trading International and SK Entum by February this year. Upon completion of the SK Enmove merger, the company will have established an integrated energy portfolio spanning batteries, petroleum, LNG, and energy solutions.

President Jang added, "Based on a stable financial structure, SK Innovation will be reborn as a company that possesses both profitability and growth potential," and continued, "Through this, we will enhance corporate value and actively expand shareholder benefits."