SK Innovation to absorb battery separator unit SKIET

SK Innovation will absorb its battery separator subsidiary SK IE Technology, bringing the struggling business back under direct control five years after it went public.

The companies said Tuesday that their boards approved the merger to strengthen SKIET’s financial stability, streamline operations and improve the separator business’s long-term competitiveness.

SK Innovation will remain the surviving company and issue new shares to SKIET shareholders. Each SKIET common share will be exchanged for 0.117454 SK Innovation share.

The exchange ratio was calculated from the companies’ recent market prices in accordance with Korea’s capital markets law.

SK Innovation’s board and SKIET shareholders are scheduled to approve the deal Nov. 24. The merger will take effect Jan. 1, 2027, with the new SK Innovation shares set to list Jan. 18.

As the transaction qualifies as a small-scale merger for SK Innovation, its shareholders will not vote on the deal or receive appraisal rights. SKIET will follow the standard merger process.

The deal effectively reverses SK Innovation’s 2019 spinoff of its materials business. SKIET listed on the Kospi in May 2021 as demand for lithium-ion battery separators surged alongside the global electric vehicle market.

Its business environment has since deteriorated amid slowing EV growth, delayed demand recovery in North America and intensifying price competition from Chinese manufacturers.

SK Innovation said the downturn has limited SKIET’s ability to improve profitability, generate cash and raise funds independently, making integration more advantageous than retaining it as a separate company.

Following the merger, SK Innovation plans to reduce overlapping and financing costs while combining its research capabilities with SKIET’s product development expertise. It will also explore growth areas such as separators for energy storage systems.

“The merger will strengthen financial stability and streamline the business structure,” an SK Innovation official said.