
SK On, the battery manufacturing unit under SK Group, said Sunday it had completed a three-way merger with its sister companies — SK Trading International and SK Enterm — to bolster its position in the global supply chain for the electric vehicle battery industry.
As part of the merger, SK Enterm, a commercial tank terminal operator, will continue its operations within SK Trading International, which in turn will function as part of SK On under a company-in-company system. The trading unit has also changed its name to SK On Trading International. This transformation integrates the trading affiliate, previously focused on crude oil and petroleum products, into SK On, a change that took place last November.
For SK On, one of the primary benefits of the merger is enhancing its raw material sourcing abilities. By using the trading expertise and global network of SK On Trading International, the battery maker aims to reduce raw material costs and minimize risk factors such as price volatility and other trade-related challenges.
Given that the trading unit’s partners are considering moves into the battery raw materials business, SK On is poised to further expand its global supply chain.
SK Enterm’s tank terminal assets, including storage tanks and logistics systems, could also provide more efficient and profitable trading solutions for SK On.
The merger is anticipated to improve the profit structure of the battery maker, which recorded its first quarterly profit during the July to September period, following its spinoff from SK Innovation in 2021. SK On’s sales revenue and assets are projected to increase to 62 trillion won ($4.2 billion) and 40 trillion won, respectively, up from 13 trillion won and 33 trillion won in 2023.
By adding two SK subsidiaries that are less sensitive to external market fluctuations and require limited capital expenditure, SK On hopes to stabilize its profits. The company expects the merger to add approximately 500 billion won in earnings before interest, taxes, depreciation and amortization (EBITDA) — a measure of a company’s ability to generate cash from its business operations.
The battery company plans to use this to ramp up its portfolio diversification, manufacturing competitiveness and research and development capabilities.
“Throughout the merger, we will lay a foundation for long-term growth by creating synergies and securing a distinctive competitive edge,” stated an SK On official. “SK On will evolve into a global battery and trading company, balancing growth potential with stability.”
By Byun Hye-jin (hyejin2@heraldcorp.com)