SK Corp-SK Materials Merger... Accelerating Leap to Global No.1 Advanced Materials Company

Securing the Global Advanced Core Materials Market for Semiconductors and Electric Vehicles
Unifying Advanced Materials Business Promotion System and Simplifying Governance Structure

[Asia Economy Reporter Hwang Yoon-joo] SK Inc. and its key affiliate in the advanced materials sector, SK Materials, are merging. Through this merger, they plan to combine SK Inc.'s global investment capabilities with SK Materials' business development expertise to accelerate the execution of their financial story in the advanced materials field, while focusing on enhancing management efficiency and increasing shareholder value of the merged entity.

SK Inc. and SK Materials announced on the 20th that they held board meetings respectively and approved the agenda to proceed with the merger between the two companies.

SK Inc. will absorb SK Materials through a small-scale merger by issuing new shares in exchange for SK Materials' stock, with 1 share of SK Materials common stock being allocated 1.58 shares of SK Inc. common stock. The merger will take the form of SK Materials spinning off all its business units, including specialty gases, into a newly established company, while the remaining holding company business will merge with SK Inc. The newly established specialty gases company will focus on strengthening business competitiveness and expertise as an operating company. After approval at the SK Materials shareholders' meeting and SK Inc. board meeting on October 29, the merger process is expected to be completed on December 1.

The advanced materials market is seeing a growing need for continuous investment and sophisticated management strategies due to the emergence of high value-added core technologies. SK Inc. and SK Materials decided to pursue the merger as the optimal way to maximize the strengths of both companies in order to actively explore business opportunities in advanced core materials, which are considered next-generation growth areas such as semiconductors and electric vehicles, and to secure a leading position in the global market.

Accordingly, SK Inc.'s global investment management capabilities and financing capacity will be organically combined with SK Materials' rich business development experience, which is expected to dramatically strengthen the advanced materials business competitiveness of the merged entity in a short period. In a fiercely competitive global environment among key materials companies in the U.S., Europe, and China, timely large-scale investment and securing business expertise are indispensable factors.

Through this merger, the business promotion system in the advanced materials sector will be unified under SK Inc., simplifying the governance structure and further enhancing corporate value. In March this year, SK Inc. announced through its financial story its direction to reorganize its portfolio into an understandable and simple & clear structure centered on core sectors.

With the advanced materials business investment entities, which had been separately managed by the two companies, unified under SK Inc., it is expected that global partnerships, mergers and acquisitions (M&A), and investments will be more effectively accelerated to secure a leading position in the global market for high-growth, high value-added advanced materials businesses. The value of SK Materials as an investment company will also be directly reflected in the corporate value of the merged entity.

Above all, as the corporate value of the merged entity increases, shareholders of both companies are expected to benefit from enhanced shareholder value resulting from the merger. Existing SK Inc. shareholders can expect corporate value enhancement benefits as the proportion of the high-growth advanced materials business expands, while existing SK Materials shareholders will not only benefit from value enhancement due to synergies in the advanced materials sector of both companies but also enjoy tangible effects from SK Inc.'s diverse investment portfolio growth and its proactive shareholder return policies.

SK Inc. has declared its business goal through its financial story to become the global No. 1 comprehensive semiconductor materials and battery materials company by 2025, focusing on securing core materials and next-generation technologies for semiconductors and batteries through active investment. SK Inc. has also announced a vision to realize a corporate value of KRW 140 trillion by 2025, centered on four core businesses: advanced materials, bio, green, and digital.

Since being acquired by SK Inc. in 2016, SK Materials has rapidly expanded its business through swift investments into semiconductor precursors, semiconductor etching gases, photoresists, and OLED materials, quickly growing into a specialized semiconductor and display materials company. As a result, SK Materials' corporate value has grown more than threefold compared to 2016, and recently it has been actively pursuing business diversification into next-generation battery anode materials and other fields.

This content was produced with the assistance of AI translation services.