SK Group Chairman Chey Tae-won speaks at a top executive meeting held at Grand Walkerhill Seoul on June 15, 2023. (SK Supex Council)

SK Innovation, the country's biggest private gas firm, said Thursday it is "reviewing" many business options to strengthen the company's competitive edge, but it has not decided on the reported merger with its sister firm SK E&S.

Earlier in the day, a local daily reported that the company is preparing for a merger with SK E&S and that SK Group will issue final approval of the plan during its top executive meeting slated for June 28-29.

"We are reviewing various strategic measures, including a merger, to boost competitive edge in business, but nothing has been decided yet,” the company said, adding that nothing has been decided over the reported merger with SK E&S. The gas firm said it will release an additional filing when a decision is made, or within one month of Thursday's filing.

If the two companies proceed with the merger, they would become the 8th largest conglomerate with an asset of 106 trillion won.

The idea of the merger is apparently being reviewed as SK Group, the country's second-largest conglomerate by asset, is seen speeding up efforts to carry out a comprehensive overhaul of its affiliates and business portfolio.

According to industry sources, SK Innovation seeks to reduce the losses of its battery affiliate SK On. SK On has been logging operating losses for 9 consecutive quarters amid the downturn in the global electric vehicle market. It is also preparing to have an IPO and requires cash.

SK E&S, which focuses on renewable energy including solar and wind, and liquefied natural gas, is considered a cash cow for the SK Group. The company logged a revenue of 11 trillion won and an operating profit of 1.3 trillion won last year.

SK Innovation, the country’s biggest private energy firm based on fossil fuel, recorded sales of 77 trillion won and an operating profit of 1.9 trillion won last year.

"It is too early to assume the merger will happen as there are many factors that should be considered and reviewed before we finalize the decision," an SK official said.

Following the report, SK Innovation's stock price jumped over 16 percent before closing Thursday.

Other SK affiliates are also taking measures to restructure their business portfolio to improve management efficiency and nurture new growth drivers.

SK Networks announced Thursday that it is selling 100 percent of its share of SK Rent-a-Car, its rental car service to Affinity Equity Partners, a Hong Kong-based private equity fund, for 820 billion won.

SK Networks said it passed the plan at a board meeting and will complete the process within the third to fourth quarter this year.

The decision comes as the company intends to accelerate the advancement of artificial intelligence-focused business models for new growth, SK Networks added.

At the top executive meeting set to take place on June 28-29, SK Group is expected to discuss plans to reduce the number of its affiliates.

As of February, the conglomerate reported it has 213 affiliates to the Fair Trade Commission. The number is three times more than other major conglomerates, including Samsung Group's 63 affiliates, Hyundai Motor Group's 67 affiliates and LG Group's 63 affiliates.

SK Group Chairman Chey Tae-won, son of the late chairman, and other members of the founding family, including SK Innovation Vice Chairman Chey Jae-won and SK Supex Council Chairman Chey Chang-won, are expected to attend, along with other heads of SK companies.

Chey Chang-won reportedly told the executives that it "does not make sense that the company has so many affiliates," and said they should reduce them to a "manageable" number, according to industry sources.

By Jo He-rim (herim@heraldcorp.com)