Background of SK Inc.-SK Materials Merger: "Advanced Materials Grow Bigger Together" (Comprehensive)

Strengthening Competitiveness through Proactive Investments such as New Business Discovery and M&A
Synergy Effects with Other Affiliates

[Asia Economy Reporter Hwang Yoon-joo] With SK Inc. and SK Materials deciding to merge, it is expected that their investment capacity in the advanced materials business, where global competition is intensifying, will be enhanced. The materials business in recently spotlighted fields such as semiconductors, displays, and electric vehicles is seeing a succession of core technologies emerging, and many have pointed out that proactive and steady investment must back this development. The industry anticipates that the synergy between SK Inc., which has accumulated know-how and financing capabilities as an investment specialist company, and SK Materials, which has strengthened its competitiveness in the materials business after becoming part of the SK Group, will be realized.

Earlier, the two companies held a board meeting on the 20th and resolved to proceed with the merger. SK Inc. will issue new shares and exchange them for SK Materials' shares in a small-scale merger, absorbing SK Materials.

For each common share of SK Materials, 1.58 common shares of SK Inc. will be allocated. The merger involves SK Materials physically splitting off all business units including specialty gases to create a new company, and simultaneously, the remaining holding company business unit will merge with SK Inc.

The newly established specialty gases company will focus on strengthening business competitiveness and expertise as an operating company. The process will be finalized in early December after shareholder meetings and board meetings in late October. The two companies reportedly began merger discussions in June, viewing the next one to two years as a critical period to proactively secure investment opportunities in the advanced materials sector, which will determine the global market landscape.

The two companies stated that they are pursuing this merger based on the judgment that it is necessary to sophisticate management strategies in the global advanced materials market, where high value-added core technologies are emerging one after another. To quickly find new businesses or carry out mergers and acquisitions (M&A) and external joint ventures (JV), it is essential to have investment targets and financial capacity, so the combination of the two companies, each with strengths in different fields, is expected to create synergy.

SK Inc., positioning itself as an investment specialist company, has focused on investing in future growth areas at the SK Group level, including advanced materials, bio, green, and digital sectors. With this merger, it is anticipated that the competitiveness of the investment company will directly reflect on the corporate value of the merged company, and synergies with other companies previously invested in by SK, such as SK Siltron and Yes Power Technics, can also be generated.

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