SK Innovation is set to absorb SK IE Technology (SKIET), its battery separator subsidiary, in a move aimed at reducing financial pressure and rebuilding the competitiveness of its struggling separator business.
The boards of SK Innovation and SKIET approved the merger on Aug. 25. SK Innovation will remain the surviving company, while SKIET will be dissolved following the transaction. The merger ratio has been set at 1 to 0.1174540, meaning SKIET shareholders will receive approximately 0.117 shares of SK Innovation for each SKIET common share they own. The companies plan to complete the merger on Jan. 1, 2027, subject to the required approval procedures, with the newly issued shares scheduled to be listed on Jan. 18.
The decision comes as SKIET has struggled with a prolonged slowdown in electric-vehicle demand, delayed recovery in major markets and intensifying price competition from Chinese separator manufacturers. SKIET, which was spun off from SK Innovation in 2019 and listed in 2021, has seen its profitability deteriorate sharply in recent years.
According to its latest financial results, SKIET's operating profit of 50.1 billion won in 2023 turned into a 290 billion won operating loss in 2024. The company recorded another 246 billion won operating loss in 2025, followed by a 136 billion won loss in the first half of 2026. The worsening financial position has also made independent fundraising increasingly difficult. SSeoul Economic Daily+1
SK Innovation expects the merger to reduce duplicated expenses and financing costs while allowing the parent company to directly manage the separator business. It also plans to combine SK Innovation's research and development capabilities with SKIET's product development expertise to strengthen the business.
Expansion into separators for energy storage systems (ESS) is another area under consideration. The strategy reflects an effort to reduce the separator unit's reliance on the sluggish EV market and identify new sources of demand.
The merger is also being viewed as a major milestone in SK Innovation's broader portfolio restructuring, which began in earnest in 2024. The company has pursued a series of mergers, asset sales and organizational changes to strengthen its financial structure and improve the sustainability of its battery business.
SK Innovation's merger with SK E&S in November 2024 created an integrated company with assets of roughly 100 trillion won. SK On subsequently absorbed SK Trading International and SK Enmove, while the group also restructured its U.S. battery joint venture with Ford to reduce financial burdens.
The latest merger brings the separator business, which had operated as a separately listed company for several years, back into SK Innovation. The move is therefore being interpreted by industry observers as one of the final steps in the group's ongoing business rebalancing.
SK Innovation has emphasized that the transaction is not simply aimed at absorbing SKIET's financial burden. The company expects greater integration between the parent and subsidiary to create cost synergies and improve decision-making efficiency. SK Innovation estimates that the merger could generate about 60 billion won in annual cost savings. SSeoul Economic Daily
Market reaction, however, has been cautious. SK Innovation shares fell more than 3% in after-hours trading following the announcement, reflecting investor concerns about taking on SKIET's losses and financial obligations. SSeoul Economic Daily
SK Innovation said the merger is designed to strengthen financial stability, improve the efficiency of its business structure and enhance the long-term competitiveness of its separator operations. The company added that it would work to ensure the transaction contributes to a recovery in business competitiveness and greater shareholder value.
