SK Inc. and SK Materials will accelerate market entry into global advanced key materials sectors including semiconductors and electric vehicles through a merger.

SK Inc. (Representative Director Jang Dong-hyun), an investment specialist company, and SK Materials (Representative Director Lee Yong-uk), a key subsidiary in the advanced materials field, announced on the 20th that their respective boards of directors held meetings and approved the merger plan between the two companies.

Through the merger, the two companies plan to combine SK Inc.'s global investment capabilities with SK Materials' business development capabilities to accelerate the execution of the financial story in the advanced materials field, while strengthening management efficiency and enhancing shareholder value of the merged entity.

SK Inc. will conduct a small-scale merger by issuing new shares to be exchanged for SK Materials stock and absorb SK Materials. SK Materials common shareholders will receive 1.58 shares of SK Inc. common stock per share of SK Materials common stock.

The merger takes the form of SK Materials dividing all business segments including specialty gases through physical division to create a new entity, and simultaneously having the continuing holding company business division merge with SK Inc.

The specialty gases new entity will focus on strengthening business competitiveness and expertise as an operating company.

Following approval by the SK Materials shareholders meeting on October 29 and the SK Inc. board of directors, the merger procedures are scheduled to be completed on December 1.

The advanced materials market is increasingly requiring sustained investment and advancement of management strategies due to the successive emergence of high-value-added key technologies.

SK Inc. and SK Materials decided to pursue the merger as an optimal approach to maximize the strengths of both companies by actively identifying business opportunities in advanced key materials sectors, which are recognized as next-generation growth areas including semiconductors and electric vehicles, and to occupy the global market.

Accordingly, the global investment management capabilities and fund-raising ability possessed by SK Inc. will be organically combined with SK Materials' abundant business development experience, and the advanced materials business competitiveness of the merged entity is expected to be dramatically strengthened in a short period.

In a situation where global competition among core materials companies in the United States, Europe, China and other regions is intense, timely large-scale investment and securing business expertise are essential factors.

Through this merger initiative, the business execution system in the advanced materials field will be unified under SK Inc. and the governance structure will be simplified, which is expected to further enhance corporate value.

SK Inc. announced in March of this year through its financial story the direction of portfolio restructuring toward an easy-to-understand (Understandable) and simple and clear (Simple & Clear) structure centered on core sectors.

As the advanced materials business investment entities that both companies had been proceeding with on a case-by-case basis are unified under SK Inc., the global market entry of high-growth, high-value-added advanced materials business will be more effectively accelerated through various management strategies including global partnerships, mergers and acquisitions (M&A), and investments, and the investment value of SK Materials will be directly reflected in the corporate value of the merged entity.

Above all, as the corporate value of the merged entity increases in this manner, shareholders of both companies are expected to benefit from shareholder value enhancement resulting from the merger.

Existing SK Inc. shareholders can expect corporate value enhancement benefits as the proportion of high-growth advanced materials business expands, and existing SK Materials shareholders are expected to enjoy not only value enhancement from synergies in the advanced materials sector of both companies but also practical benefits from SK Inc.'s diverse investment portfolio growth and SK Inc.'s proactive shareholder return policy.

SK Inc., through its financial story, announced the business target of leaping to become the world's leading comprehensive semiconductor materials and battery comprehensive materials company by 2025, and has been focusing on securing semiconductor and battery key materials and next-generation technologies through active investment.

SK Inc. declared a vision to realize corporate value of 140 trillion won in market capitalization by 2025 centered on four core businesses including advanced materials, biotech, green, and digital.

SK Materials, after being acquired by SK Inc. in 2016, has rapidly grown into a specialized semiconductor and display materials company by expanding its business to semiconductor precursors, semiconductor etch gases, photoresists, and OLED materials through swift investment.

Through this, SK Materials' corporate value has grown more than three times compared to 2016, and recently, it is actively promoting business diversification including next-generation battery anode materials sectors.

An SK official stated, "The merged entity will consolidate the capabilities possessed by SK Inc. and SK Materials to acquire differentiated global competitiveness in semiconductor, battery, display, and eco-friendly materials business in a short period," and added, "Through rapid growth in the global advanced materials market, we will achieve corporate value maximization and shareholder value enhancement."