SK Innovation Co., Ltd. Falls 13% on News of Absorbing Subsidiary SKIET [Stock Market Highlight]

[Financial News] SK Innovation Co., Ltd. is down about 13% in early trading after news that it will absorb its separator subsidiary, SK ie technology (SKIET).
As of 9:20 a.m. on the 26th, SK Innovation Co., Ltd. was trading at 107,600 won, down 13.92% from the previous session. 
At the same time, SKIET was trading at 15,750 won, up 2.54% from the previous close.
After the market closed the previous day, SK Innovation Co., Ltd. announced that it had decided to merge with SKIET. SK Innovation Co., Ltd. will remain as the surviving company, while SKIET will be dissolved after the merger. The merger ratio is 1 to 0.1174540, meaning that SKIET shareholders will receive 0.1174540 new SK Innovation Co., Ltd. shares for each common share they hold. The two companies plan to complete the merger on Jan. 1 next year after going through the required approval procedures.
In the market, attention is focusing less on the long-term efficiency gains from the merger and more on the possibility that SK Innovation Co., Ltd. will take on SKIET's weak earnings and financial burden. SKIET has struggled to raise funds as profitability and cash generation have deteriorated amid slowing electric vehicle demand and intensifying price competition with Chinese companies.
According to SKIET's semiannual report, operating profit of 50.1 billion won in 2023 swung to an operating loss of 290 billion won in 2024. The company also posted an operating loss of 246 billion won last year and a deficit of 136 billion won in the first half of this year.
Through this merger, SK Innovation Co., Ltd. plans to ease SKIET's business and financial risks while reducing duplicate costs and financing expenses. It also intends to expand into new businesses, including separators for Energy Storage System (ESS), by combining the two companies' research and development capabilities. 

[email protected] Park Ji-yeon Reporter