SK ie technology to merge into SK Innovation

SK ie technology will merge into SK Innovation as slowing electric-vehicle market growth, delayed demand recovery in North America and other key markets, and sharper price competition after Chinese rivals entered the market have limited short-term improvements in profitability and cash generation.

In the second quarter, it reported revenue of 39.5 billion won ($28.6 million) and an operating loss of 63.4 billion won ($45.9 million). SK ie technology makes wet-process separators for rechargeable batteries.

"We will do our best to make the merger contribute to restoring business competitiveness and increasing shareholder value," an SK Innovation official said.

SK Innovation will be the surviving company, while SK ie technology will be dissolved as a separate entity. The deal calls for 4.481 million newly issued SK Innovation shares, representing 2.6 percent. SK, SK Innovation's largest shareholder, is expected to own 50.7 percent following the merger, down from 52.1 percent beforehand. SK Innovation's corporate value for the merger is 21.3 trillion won ($15.4 billion), while SK ie technology's is 1.21 trillion won ($876 million). A shareholders meeting is scheduled for Nov. 24. The merger is expected to take effect next Jan. 1, and the new shares are scheduled to list next Jan. 18.

After the merger, SK Innovation plans to combine its research and development resources with SK ie technology's product-development capabilities, reduce duplication and financing costs, and expand its separator business for energy storage systems. SK ie technology also plans to sell a Chinese subsidiary, halt commercial operations at the Jeungpyeong plant and reorganize production around Poland.