May 04, 2024

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[THE INVESTOR] SK Group is speeding up its business reshuffle through merger and acquisition deals, following Chairman Chey Tae-won’s return to the company’s management in August last year after a three-year hiatus.
Most recently, its trading arm SK Networks was reportedly chosen as the preferred bidder to buy local home appliance vendor Tongyang Magic.

The deal is expected to create synergies by linking SK Networks’ rental business and Tongyang Magic’s home appliances.

“If confirmed, the deal can create synergies within the group by working with SK Telecom’s Internet of Things and SK Engineering & Construction’s smart home business,” Kim Tae-hyun, an analyst at LIG Investment & Securities told The Korea Herald. 

SK Group Chairman Chey Tae-won

The acquisition is the latest of a string of deals made.

In February, when Chey returned to the company’s board of directors, SK Holdings acquired a full stake in pharmaceutical contract manufacturing organization SK Biotech and bought new shares worth 40 billion won ($36 million) issued by the organization.

SK Biotech is a company that was set up by splitting the medical production business of SK Biopharmaceuticals -- SK Holdings’ subsidiary -- in April last year.

SK Holdings is also reportedly planning to sell some stakes in SK Biopharmaceuticals through a pre-initial public offering to raise around 1 trillion won in cash.

“If SK Holdings sell the stakes, it could raise around 1 trillion won in cash. With the cash in hand the company is likely to push M&A in the near future to expand its bio business,” said Choi Nam-gon, an analyst at Yuanta Securities.

Apart from Tongyang Magic and SK Biotech, SK Group also pushed for a deal this year to buy local cable TV operator CJ HelloVision with the aim of making an investment of 500 billion won.

The deal was rejected by the anti-trust watchdog amid strong opposition from rival companies including KT and LG Uplus. 

Chey and around 40 subsidiary heads are scheduled to meet on Oct. 12 to map out the group’s future business plan.

During the meeting, SK Innovation Vice Chairman Chung Cheol-gil will reportedly propose some merger and acquisition plans in response to volatile oil prices.

“Apart from the bio business, SK Group is expected to continue to push for merger and acquisitions to boost its grown engine businesses -- pharmaceuticals, energy, semiconductor and information technology,” said Lee Sang-heon, an analyst at HI Investment & Securities.

By Shin Ji-hye/The Korea Herald (shinjh@heraldcorp.com)