SK Innovation said on the 25th that its board approved a plan to merge its subsidiary SK IE Technology (SKIET). The goal is to reorganize SKIET's separator business into a division of the parent company to improve financial stability and operational efficiency.
The merger will take the form of SK Innovation absorbing SKIET. SK Innovation, the surviving company, will undergo a small-scale merger, while SKIET, the dissolving company, will proceed under the general merger process. SK Innovation will issue new merger shares and deliver them to SKIET shareholders.
The merger ratio was set at 1 to 0.1174540. It was calculated based on the reference market price derived from the weighted arithmetic average closing prices for the most recent one month and one week and the arithmetic average of the most recent day's closing prices for SK Innovation and SKIET, in accordance with the Financial Investment Services and Capital Markets Act. Accordingly, 0.11 shares of SK Innovation common stock will be allotted for each one share of SKIET common stock.
The two companies plan to finalize related procedures with Jan. 1 next year as the merger date after winning approval for the merger plan at the SK Innovation board meeting and the SKIET shareholders meeting on Nov. 24. New SK Innovation shares resulting from the merger will be listed on Jan. 18 next year. As SK Innovation is proceeding under the small-scale merger process, the appraisal right procedure will be omitted, and shareholder approval will be replaced by a board resolution.
SKIET was launched in Apr. 2019 through a physical split of SK Innovation's materials business and was listed on the stock market in May 2021. Based on its production capacity for LiBS (Lithium-ion Battery Separator), a key material for electric-vehicle lithium-ion batteries, it increased its market share in the secondary battery separator field.
However, it has recently faced difficulties due to the slump in the electric-vehicle market, market entry by Chinese competitors, and intensifying price competition. As a result, it hit limits in improving profitability and cash generation in the short term, and its capacity to raise funds on its own was also constrained.
In response, SK Innovation determined that merging with the parent company, rather than SKIET maintaining an independent corporate structure, would be more advantageous for resolving business and financial risks and enhancing business competitiveness, and thus pursued this merger. After the merger, SK Innovation plans to improve operational efficiency in the separator business and reduce various overlapping and financial expenses.
An SK Innovation official said, "By combining SK Innovation's research and development capabilities with SKIET's product development capabilities, we expect to strengthen competitiveness, including expansion of the separator business for energy storage systems (ESS), going forward."