SK to merge EV battery unit with lubricant arm

Jang Yong-ho, executive president of SK Innovation, announces the company's plan to enhance its corporate value at SK Group's headquarters in Seoul, Wednesday. Courtesy of SK Innovation

SK Innovation announced Wednesday it will merge its battery manufacturing unit with its lubricant-producing subsidiary as part of strategies to improve its financial structure and boost competitiveness.

The group's intermediate holding company, responsible for its energy and petrochemical businesses, said that the boards of directors of SK On and SK Enmove both approved the former's acquisition of the latter earlier in the day. The newly merged entity is scheduled to launch by Nov. 1.

SK Innovation explained the merger will help SK On improve profitability, noting demand from the battery maker's customers for SK Enmove’s immersion cooling technology.

The decision comes after SK Enmove's unsuccessful initial public offering in June, which led SK Innovation to fully incorporate the lubricant arm into its wholly-owned subsidiary. The listing, seen as a potential way to fund the group’s struggling battery and petrochemical businesses, was scrapped following a government warning against conglomerates listing subsidiaries through carve-outs.

Since then, SK Innovation has shifted its focus to unifying its two subsidiaries.

Jang Yong-ho, executive president of SK Innovation, said the company does not currently have plans to list the forthcoming entity on the stock market.

“The merger is expected to deliver significant synergies and will allow us to show an even higher level of competitiveness in the global market,” SK On CEO Lee Seok-hee said.

SK Innovation also decided to raise a combined 8 trillion won ($5.8 billion) this year through paid-in capital increases. The company set a strategic goal of reaching 20 trillion won in earnings before interest, taxes, depreciation and amortization by 2030.

Last year, SK Group began aggressively restructuring its overall businesses. Following the merger of SK Innovation and SK E&S last November, SK On acquired SK Trading International and SK Enterm.