What is the SK On Stake Increase?

SK Innovation plans to invest ₩35.881 trillion by October 31, 2025, to increase its stake in SK On to 90.32%. This will be an off-market acquisition, representing 9.07% of SK Innovation’s capital.

Why this Investment?

SK Innovation aims to strengthen its management control over SK On and bolster its competitiveness in the battery business. This strategic decision is interpreted as a move to gain leadership in the rapidly growing electric vehicle battery market, especially given the recent struggles in the petroleum business and increasing operating losses in the battery segment (Q3 2025: revenue of ₩21.1466 trillion, operating loss of ₩44.6 billion).

Impact on Investors

Short-Term Impacts:

  • Increased Financial Burden: Potential rise in debt ratio and deterioration of liquidity due to large-scale investment.
  • Opportunity Cost: Limited investment in other growth businesses.
  • Negative Market Reaction: Concerns about short-term earnings improvement leading to potential stock price decline.

Long-Term Impacts:

  • Enhanced Battery Business Competitiveness: Faster decision-making, strategic investment, and technology development.
  • Synergy between SK Innovation and SK On: Increased R&D investment efficiency, reduced production costs, and global market expansion.
  • Long-Term Growth Engine: Expected benefits from the growth of the battery market.

Investor Action Plan

Investors should closely monitor external factors like international oil prices, raw material prices, exchange rates, interest rates, and gold prices, as well as SK Innovation’s derivatives trading strategy. Pay particular attention to the stabilization of raw material prices, improvement in battery business profitability, and growth trends in the E&S business segment. Investment decisions should consider both short-term financial burdens and long-term growth potential.