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The proposed merger aims to enhance the financial stability of both SK Innovation and SK IE Technology (SKIET), proactively manage risks arising from an uncertain business environment, and improve overall operational efficiency.

Recently, SKIET’s profitability has deteriorated due to prolonged challenges in the business environment. These include a slowdown in electric vehicle (EV) market growth, delayed demand recovery in key markets such as North America, and intensifying price competition driven by the global expansion of Chinese competitors. As a standalone entity, SKIET faces increasing constraints in securing financing and generating cash flow to effectively navigate these headwinds.

SK Innovation comprehensively evaluated the sustainability of SKIET as an independent operation, the anticipated business and financial risks, and various strategic alternatives. We concluded that a merger with SK Innovation is the most rational approach. It will provide a stronger financial foundation to mitigate business and financial risks while enhancing operational efficiency.

We are committed to ensuring that this merger not only addresses SKIET’s near-term challenges but also drives the recovery of its separator business competitiveness, ultimately leading to the enhancement of both corporate and shareholder value.

The merger between SK Innovation and SK IE Technology is expected to deliver key benefits, including enhanced consolidated financial stability, streamlined business structures for better cost competitiveness, strengthened business capabilities, and mitigated operational risks. 

In terms of financial stability, we plan to leverage SK Innovation’s strong credit profile to establish a stable financing foundation, enabling the refinancing of SKIET’s debt and a significant reduction in financial costs.

Regarding operational efficiency, the integration of organizational functions and business restructuring will lead to improved overall operational effectiveness.

Furthermore, by combining SK Innovation’s technological prowess with SKIET’s product development expertise in separators, we anticipate enhancing product development efficiency and boosting our competitive edge, particularly in the Energy Storage System (ESS) separator business.

Additionally, the merger will mitigate business risks by alleviating the risk of separator supply disruptions to key customers, thereby proactively preventing any potential spillover of business risks to SK Innovation affiliates.

Finally, we expect tangible cost savings, including reduced administrative expenses following the integration, which should ultimately drive an improvement in EBITDA.

SK IE Technology (SKIET) is an SK Group affiliate established in 2019 through a spin-off from SK Innovation. Its core business is the manufacturing and sales of Lithium-ion Battery Separators (LiBS), a critical component of lithium-ion batteries.

Separators play a vital role in enhancing battery safety and performance by preventing direct contact between the cathode and anode while facilitating the movement of lithium ions.

Leveraging its proprietary technology, SKIET produces ultra-thin and ceramic-coated separators and has operated production facilities in South Korea, China, and Poland.

Recently, the company has experienced financial headwinds—recording revenue of KRW 75.4 billion and an operating loss of KRW 136.7 billion in the first half of 2026—primarily due to a slowdown in EV market growth. However, SKIET is actively working to improve the profitability of its separator business by strengthening R&D for the energy storage system (ESS), EV, and robotics markets, and by optimizing its production footprint, with a focus on Europe.

As SK IE Technology is currently a consolidated subsidiary of SK Innovation, the immediate impact of the merger on SK Innovation’s consolidated financial metrics is expected to be limited.

Notably, SK Innovation's total consolidated debt will not increase following the merger. Over the mid-to-long term, we expect to achieve meaningful savings by eliminating redundant administrative costs.

Furthermore, as the borrowing entity for the separator business transitions to SK Innovation, we will be able to secure stable financing and ensure financial soundness by leveraging SK Innovation's stronger credit profile.

Consequently, we anticipate annual cost savings and subsequent improvements in EBITDA, which will further strengthen our financial stability and drive corporate value growth.

SK Innovation will make every effort to ensure that this merger translates into enhanced cost efficiencies, robust financial stability, and a recovery in profitability, ultimately contributing to the maximization of shareholder value.

SK Innovation fully recognizes that shareholder returns are a crucial component of enhancing corporate value.

However, to address the large-scale deficits and weakened financial structure experienced over the past two years, we had to prioritize securing financial stability, which regrettably led to the suspension of dividend payments for the 2025 fiscal year.

Our commitment to prioritizing financial soundness remains unchanged. Through this merger, we expect to drive corporate value growth by further strengthening our financial stability and streamlining our business structure. Regarding the shareholder return policy for the 2026 fiscal year, we will transparently communicate our plans once they are finalized, following a comprehensive review of our financial stability, the level of profitability improvement, and our future investment and capital requirements.

Ultimately, we aim to leverage this merger as a turning point to improve our financial structure and restore business competitiveness, making every effort to establish a more sustainable shareholder return policy over the mid-to-long term.

For mergers between affiliated listed companies, relevant laws and regulations stipulate that the merger valuation must be based on market stock prices.

The rationale behind this legal requirement is that market prices serve as the universal standard of value in independent third-party transactions.

Calculated in accordance with these statutory pricing methods, the merger value is KRW 125,862 per share for SK Innovation and KRW 14,783 per share for SK IE Technology. Consequently, the merger ratio was set at 1 : 0.1174540 (SK Innovation to SK IE Technology).

To ensure that this ratio accurately reflects the true economic value for our shareholders, SK Innovation underwent an additional review by an independent external valuation firm appointed by a special committee. This extra step allowed us to thoroughly verify the fairness and appropriateness of the merger valuation and ratio from the perspective of SK Innovation's shareholders, going beyond mere statutory compliance.

By combining the technological prowess, business capabilities, and financial foundations of both companies through this merger, SK Innovation is fully committed to strengthening its competitive edge and driving mid-to-long-term shareholder value.

Since SK Innovation is proceeding with a small-scale merger process while SK IE Technology is undergoing a standard merger process, the key procedures and timelines for the two companies differ slightly.

SK Innovation’s key expected timeline is outlined below:

Please note that should there be any adjustments to this schedule, we will promptly inform our shareholders through regulatory filings and public disclosures.

For detailed information regarding SK IE Technology’s specific merger procedures and timeline, we kindly direct you to their official website and the Securities Registration Statement.

For SK Innovation, the proposed transaction qualifies as a small-scale merger under the Korean Commercial Code, which allows the approval of the merger agreement to be substituted by a resolution of the Board of Directors.

Accordingly, the Board resolution approving the merger—in lieu of a general shareholders' meeting—is scheduled to take place on November 24, 2026.

Please note that while a general shareholders' meeting will not be convened, a statutory period is still provided for shareholders to object to the small-scale merger. SK Innovation shareholders who oppose the transaction may submit their notice of objection between September 9, 2026, and September 23, 2026. Further details regarding this procedure will be provided in a subsequent public announcement.

We remain fully committed to transparently communicating the transaction's rationale, key terms, expected benefits, and matters related to shareholder rights, ensuring that our shareholders are provided with comprehensive information.

As this transaction is proceeding under small-scale merger procedures, SK Innovation’s approval at a general shareholders' meeting is substituted by a resolution of the Board of Directors, and consequently, the exercise of appraisal rights is not applicable.

However, shareholders who oppose the small-scale merger may still submit a notice of objection during the designated submission period from September 9, 2026, to September 23, 2026.

The company is committed to communicating transparently and providing timely, comprehensive information regarding the key details of the merger, the expected timeline, and matters related to shareholder rights, ensuring that our shareholders are fully informed.

Should you have any further inquiries or require additional information, please feel free to contact the company at 02-2121-5114 or reach out directly to our Investor Relations (IR) team via email at ski_ir@sk.com