South Korean billionaire Chey Tae-won’s SK Group is undergoing a major overhaul by merging two energy units in order to strengthen the conglomerate’s finances. SK Innovation, the parent company of EV battery manufacturer SK On, will acquire energy affiliate SK E&S in an all-stock deal. The combined company will have 100 trillion won in total assets, making it the largest non-state-owned energy company in the Asia-Pacific region.
SK E&S, which focuses on liquefied natural gas and renewable energy, is a profitable arm of the SK Group, reporting operating profits of 1.3 trillion won in 2023. The merger between SK Innovation and SK E&S aims to support SK On, the EV battery maker that has been struggling with losses since being spun off in 2021. The deal is expected to strengthen the combined company’s financial structure and improve competitiveness in the energy sector.
The merger will also enhance the electrification efforts of SK Innovation and SK E&S, which have been focusing on renewable energy and district electricity businesses. In addition to the merger between SK Innovation and SK E&S, SK On will be merged with two other units of SK Innovation to enhance competitiveness in raw material purchasing. These restructuring efforts are part of SK Group’s plans to streamline operations and revive businesses after suffering heavy losses in the EV battery arm.
SK Group has been actively selling non-core assets to focus on artificial intelligence. Recently, SK Telecom invested in SMART Global Holdings, an AI infrastructure developer, and in Anthropic, an OpenAI rival. SK Networks, SK Group’s AI investment arm, has also led Korean AI startup Upstage’s Series B funding round. The conglomerate aims to secure 80 trillion won by 2026 to invest in AI and semiconductors, as well as fund shareholder returns.
The restructuring efforts at SK Group come as the conglomerate aims to revitalize its businesses and focus on key growth areas. The merger between SK Innovation and SK E&S is expected to be completed in November, pending shareholder approval. Both companies are controlled by SK Inc., the holding company of SK Group. The conglomerate’s moves to reshape its businesses and focus on AI reflect a broader strategy to stay competitive in a rapidly evolving market.
