SK gets aggressive on M&As after chairman's return

SK Group chairman Chey Tae-won

By Lee Hyo-sik

SK Group is revealing a growing appetite for mergers and acquisitions (M&As) in recent months, after its chairman Chey Tae-won returned to the helm in August.

Korea’s third-largest family-controlled conglomerate spent more than $1 billion over the past month to acquire a cable TV operator and a semiconductor materials firm, among other entities.

SK is widely expected to take over more companies in the coming months to bolster its existing units and find new growth engines, according to industry analysts.

SK’s aggressive M&A stance is in stark contrast to how the group behaved during the 24 months when its chairman Chey was behind bars on embezzlement and breach-of-trust charges.

On Nov. 2, the group acquired a 30 percent stake in CJ HelloVision, Korea’s top pay TV operator, for 500 billion won to prop up SK Telecom whose wireless telecommunications business has stagnated in the face of increasing competition with KT, LG Uplus and budget telecom service providers.

The acquisition is largely designed to help SK Telecom tap into the hybrid media platform business, which includes telecommunications, cable TV and Internet Protocol TV (IPTV).

On Tuesday, the group also acquired a 49.1 percent stake in OCI Materials, the world’s leading supplier of nitrogen trifluoride (NF3), for 482 billion won to strengthen its semiconductor unit SK Hynix. It also purchased a 20 percent stake in Socar, Korea’s largest car sharing company, for 59 billion won.

SK is also seeking to take over KDB Capital, valued at 600 billion won, to complement its brokerage unit SK Securities.

“We have been doing everything to boost the competitiveness of our energy, telecommunications, semiconductor and other business units,” a SK Group spokesman said. “As part of such efforts, we have acquired corporate entities which we think will have synergy with our existing units and help us move into new business areas. We will continue to explore opportunities to buy attractive entities.”

An executive at one of Korea’s major business associations said SK has begun reorganizing its portfolios following Chey’s return.

In recent years its struggling petrochemical and telecommunications units have also prompted the group to secure new growth momentum through M&As. Samsung Group’s recent decision to unload its defense and chemical units to Hanwha and Lotte further encouraged SK to revamp its portfolio, he said.

“SK Group is expected to suffer up to 300 billion won in losses after it failed to renew the license for its duty free shop at the Sheraton Walkerhill Hotel,” the executive said. “But this has served as a catalyst for SK to accelerate the overhaul of its business units.”

The group said it will focus on information technology services, bioengineering, pharmaceuticals, semiconductors and energy.