SK C&C, an ICT solutions developer, said Monday it would merge with SK Holdings, the holding entity of SK Group, to resolve the conglomerate’s complicated organizational structure and gain momentum in the ICT sector.
Market analysts reacted positively to the merger deal.
“The decision for the merger came at the right time when concerns over the intricate organizational structure were rising and it will likely help to increase SK Group’s capacity for investment in new businesses,” said Choi Nam-gon, an analyst at Yuanta Securities.
The latest deal has been struck while South Korea’s third-largest conglomerate by market capitalization works to streamline its highly diversified organizational structure.
Mobile carrier SK Telecom took over landline and wireless Internet services provider SK Broadband last month. Some market watchers forecast the conglomerate will merge with an investment entity likely to be established by the telecom firm down the road.
According to the deal announced Monday, SK C&C and SK Holdings would merge to create a new holding company through a share swap agreement.
The stock swap ratio has been set at one SK C&C share for 0.74 share of SK Holdings.
The merger between the firms has long been anticipated by market analysts and industry watchers as the conglomerate needed to address concerns over SK chairman Chey Tae-won’s abnormal ownership.
Other analysts said the merger is aimed at putting the business group under Chey’s tight control.
SK chairman Chey, who is currently serving a four-year jail term for embezzlement, holds a mere 0.02-percent stake in SK Holdings. He is taking the helm of the conglomerate through a 38 percent share in SK C&C, which has a 31.82 percent share in SK Holdings.
Following the merger, Chey’s share in the holding entity will increase to 23.2 percent.
SK Group said the merger decision is “aimed at resolving the intricate management structure in order to ride out difficulties caused by the worsening management environment.”
Almost all SK Group affiliates, except for a few such as chip manufacturing business SK hynix, have long been suffering from decreasing profits.
Although SK C&C leads the deal, the merged entity will tentatively keep the name SK Holdings to maintain its identity among group affiliates, which operate in a wide array of businesses with a chemical firm, an oil refiner, and a wireless carrier.
The merger deal is subject to shareholder approval on June 26. Following approval, the process would be completed by Aug. 1.
“The latest deal will create a holding company with 13.2-trillion worth of assets and help boost the competitiveness of SK Group in the ICT sector,” according to an SK Holdings official.
By Kim Young-won (wone0102@heraldcorp.com)
