SK Faces the Largest Reorganization in Two Decades Following Deals Spree

(Source: Bloomberg) The issue facing SK Inc. is that, following a $21 billion acquisition binge, the second-largest company in South Korea has grown too large.On Friday, Chairman Chey Tae-won will meet with top executives who oversee $240 billion worth of businesses, including manufacturers of batteries, mobile carriers, and suppliers of chips for artificial intelligence. According to observers, the outcomes might cause the business to undergo its largest restructuring since he assumed leadership more than 20 years ago.A six-year acquisition binge has left the company, according to one estimate, $170 trillion in debt, right before the crown jewel SK Hynix Inc. and its affiliates are set to make historic investments to take advantage of the market for AI memory chips. Chey has a personal stake in the outcome as well because he needs to raise $1 billion to finalize his divorce. Investors anticipate numerous asset sales and mergers.According to Park Ju-gun, president of Seoul-based corporate analysis company Leaders Index, "it's looking pretty bad for SK." "In the last six or seven years, every division under SK Inc. went on an extravagant buying binge to increase its size, and those excessive acquisitions have now made the group unmanageable, while the chairman is engulfed in a divorce."Chey Chang-won, Chey's cousin, is the head of the consultative committee known as SK Supex. Chey will host the meeting via video conference from the United States.

The main priorities will be rearranging the portfolio and pursuing "quality growth," according to a statement released by SK on Thursday.SK stated that during the two-day retreat, the executives will also talk about ways to enhance the biotechnology and battery industries, among other things. Around 18% of SK Inc., which oversees more than 200 SK companies through a complex network of cross-shareholdings, is controlled by Chair Chey. The founding of the organization dates back to 1953.Following the Seoul High Court's decision last month to order 63-year-old Chey to pay the largest-known divorce payment in the nation, market expectations for a restructuring have grown. Two days following the ruling, SK Inc.'s shares shot up more than 20% on speculation that the business might raise its price to support the chairman.