SK Innovation to Absorb SKIET, Bringing Separator Business Back In-House

[Financial News] SK Innovation Co., Ltd. will absorb its separator business subsidiary, SK ie technology (SKIET). As the slowdown in the electric vehicle market and aggressive pricing by Chinese rivals have increased SKIET's management burden, the company plans to reorganize the separator business within the parent company to improve financial stability and operational efficiency.
SK Innovation Co., Ltd. and SKIET each held board meetings on the day and approved a proposal to pursue the merger, the companies said on the 25th.
The merger will be carried out through SK Innovation Co., Ltd.'s absorption of SKIET. SK Innovation Co., Ltd., the surviving company, will proceed with a small-scale merger, while SKIET, the dissolved company, will follow the general merger process.
The merger ratio is 1 to 0.1174540 for SK Innovation Co., Ltd. and SKIET. SK Innovation Co., Ltd. will issue new shares and distribute them to SKIET shareholders, with each common share of SKIET receiving about 0.11 common shares of SK Innovation Co., Ltd.
The two companies plan to finalize the merger on January 1 next year after securing approval from the SK Innovation Co., Ltd. board and the SKIET shareholders' meeting on November 24. New shares issued through the merger are scheduled to be listed on January 18 next year.
The merger comes against the backdrop of worsening business conditions for SKIET.
SKIET was launched in April 2019 through the physical spin-off of SK Innovation Co., Ltd.'s materials business and was listed on the Korea Exchange in May 2021. It has expanded its business alongside the growth of the EV market, led by lithium-ion battery separators, a key material for electric vehicle batteries.
However, the global EV market has recently slowed, and demand recovery in major markets such as North America has been delayed. That has significantly changed the business environment. In addition, price competition has intensified as Chinese rivals enter global markets, making it difficult to improve profitability and cash generation in the short term. The company also said its own financing capacity is limited.
SK Innovation Co., Ltd. concluded that, rather than keeping SKIET as an independent entity, bringing the separator business into the parent company would help reduce business and financial risks and strengthen long-term competitiveness.
After the merger, the company plans to improve operational efficiency by reducing overlapping costs and financial expenses. It will also seek new growth drivers by combining SK Innovation Co., Ltd.'s research and development capabilities with SKIET's product development expertise.
In particular, the company aims to strengthen the separator business's long-term competitiveness by expanding beyond separators for EVs into areas such as Energy Storage System (ESS) separators.
A SK Innovation Co., Ltd. official said, "Through the merger, we plan to strengthen financial stability and streamline our business structure, and through that, we will work to enhance the long-term competitiveness of the separator business." The official added, "We will do our utmost to ensure that this merger leads to a recovery in business competitiveness and greater shareholder value."

[email protected] Lee Dong-hyeok Reporter