SK Group Accelerates Streamlining Efforts, Gains Breathing Room in Multibillion-Dollar SK Siltron Sale

SK Group Puts Non-Core Subsidiaries on the Market
“Big Deal” Sale of SK Siltron Gives Chairman Chey More Room as Legal Risks Ease
PEFs Reach Out to Doosan Over Potential SK Siltron Acquisition

SK Group is accelerating efforts to streamline its portfolio by divesting non-core affiliates. Following the sale of SK Specialty late last year, the conglomerate has put several more units — including SK Oceanplant, SK Stoa, and SK Siltron — on the market, signaling a strong push toward organizational downsizing.

SK Steps Up Its Subsidiary Sell-Off

According to investment banking sources on October 20, SK Telecom has decided to sell SK Stoa, Korea’s top data home shopping operator, and is in final negotiations with a preferred bidder. SK Stoa was established in 2017 after SK Broadband spun off its commerce division and became a wholly owned subsidiary of SK Telecom in 2019. The estimated sale price is reportedly around 70 million dollars.

SK Group has been accelerating the restructuring of its non-core businesses since selling SK Specialty late last year. At the time, the group sold an 85 percent stake in SK Specialty — a global leader in the specialty gas sector — to private equity firm Hahn & Company for about 2 billion dollars. In September, SK Ecoplant also moved to sell a 36.98 percent stake in SK Oceanplant, its offshore wind substructure subsidiary, selecting the D Ocean Consortium as the preferred bidder.

The group’s only domestic wafer manufacturer, SK Siltron, is also on the market. In June, SK Group conducted a preliminary bidding round to sell its 51 percent stake along with another 19.6 percent tied to a total return swap (TRS) structure. Discussions are currently underway with several potential buyers, including Hahn & Company and Doosan. If completed, the SK Siltron sale is expected to become one of SK Group’s largest recent M&A deals. The company’s equity is valued at around 1.5 billion dollars, though SK Group is reportedly seeking a sale price of about 3.7 billion dollars

SK Siltron Sale Risks Partly Eased

The sale of SK Siltron, once viewed as a key deal that could inject significant liquidity into SK Group, had made little progress in recent months. The main obstacles were a wide price gap between SK Group and potential buyers, as well as the exclusion of shares indirectly held by Chairman Chey Tae-won through a special purpose company (SPC) from the sale. The exclusion was widely seen as linked to Chey’s ongoing divorce proceedings with Noh So-young, director of the Art Center Nabi.

A court had previously ruled that Chey’s indirect holdings in SK Siltron were subject to division of marital assets and valued them at roughly 550 million dollars. If those shares are ultimately confirmed as part of the settlement, the SPC would likely be liquidated before asset division proceeds. Under the total return swap (TRS) agreement with the SPC, Chey would first repay about 170 million dollars of invested capital, then recover any remaining gains from the rise in SK Siltron’s share value. After a 27.5 percent tax payment and liquidation, the amount ultimately received could be about 80 percent lower than the original valuation.

Fortunately for SK Group, there is no immediate need to rush the sale. On October 16, the Supreme Court overturned the previous divorce ruling and remanded the case to the Seoul High Court, a move expected to substantially reduce Chey’s financial obligations. While the legal risks surrounding the case have not been fully resolved, the ruling gives SK Group more flexibility to adjust the pace of negotiations for the SK Siltron sale.

PEFs Eye Doosan as Potential Financial Investor in SK Siltron Deal

With some of the uncertainty surrounding the SK Siltron sale now eased, private equity firms are beginning to explore partnerships with potential bidders. According to industry sources, several PEF managers have recently approached Doosan Group about a possible collaboration. While Doosan has enough liquidity to pursue the acquisition on its own, it may consider bringing in financial investors (FIs) to spread investment risks. However, since Doosan currently favors proceeding independently, any PEF looking to partner with the conglomerate will need to present a proposal that aligns closely with Doosan’s strategic interests. As of June, Doosan held about 1.25 billion dollars in cash and cash equivalents.

Still, past disputes between Doosan and FIs are a cause for caution among potential partners. In the early 2010s, Doosan became embroiled in a prolonged legal battle with IMM Private Equity, Hana Financial Investment, and Mirae Asset Management over Doosan Infracore China (DICC), a subsidiary of Doosan Infracore (now HD Hyundai Infracore). The consortium invested roughly 280 million dollars in 2011 on the condition that DICC would go public. However, when the construction downturn derailed the planned IPO, the investors sued Doosan Infracore in 2015 to recover their funds. The case dragged on for six years before both sides finally reached a settlement.