SK Innovation to re-absorb SK IE Technology via merger, aiming to strengthen separator business

SK Innovation announced on the 25th that it will merge with SK IE Technology (SKIET), its battery separator manufacturing subsidiary, which it had separated seven years ago. The move signals a strategic shift to reintegrate the business and enhance its competitiveness in a challenging market.

SKIET, established in April 2019 and listed on the stock market in May 2021, has focused on producing separators for lithium-ion batteries used in electric vehicles. However, the company has faced deteriorating business conditions due to a slowdown in the EV market, delayed demand recovery in key regions, and intensified price competition from Chinese manufacturers. Last year, SKIET recorded a net loss of 211.4 billion won on sales of 261.9 billion won.

SK Innovation determined that re-absorbing SKIET would be more advantageous than maintaining it as a separate listed entity. The company anticipates that integrating the management functions, which were duplicated under the separate company structure, will improve operational efficiency. Furthermore, leveraging SK Innovation's credit rating is expected to reduce financial costs.

The merger is also intended to bolster the stability of separator supply. SK Innovation recognized the potential risk of supply disruptions if SKIET's financial instability continued, which could impact its battery production subsidiary, SK On. By merging, SK Innovation plans to utilize its financial foundation to ensure a more stable separator production and supply chain.

From a business perspective, SK Innovation aims to enhance competitiveness by combining its research and development capabilities with SKIET's product development expertise. The company plans to expand sales of separators not only for EVs but also for energy storage systems (ESS). SK Innovation believes that cost reductions from eliminating redundancies and lower financial expenses, coupled with a potential recovery in the EV market, will lead to improved profitability in the medium to long term.