Why did SK Innovation's stock price drop by more than 111 TP3 T in just one day following the news of the merger with SKIET? It is because the financial burden that could arise from acquiring a loss-making subsidiary and concerns about the dilution of existing shareholders' stakes were reflected all at once.
Conversely, SKIET's stock price rose to the daily limit due to expectations of a merger, causing the stock prices of the two companies to move in opposite directions. In this article, based on the trading results of August 26, 2026, I will summarize the background of the sharp decline, the backlash from minority shareholders, and the key variables regarding shareholder value after the merger.
The direct reason for the sharp drop in stock prices
SK Innovation has decided to absorb and merge with SKIET on August 25, 2026. Following this news, the market viewed the merger as a growth opportunity rather than A transaction in which the parent company assumes the burden of a loss-making subsidiaryI accepted it first.
According to the Korea Exchange, SK Innovation closed at 111,200 won on August 26, down 13,800 won from the previous day, with a decline of 11.041 TP3T. The intraday drop exceeded 171 TP3T at one point, but intraday figures and the closing price decline rate should be viewed using different criteria.
This sharp decline is the result of concerns that losses and financial burdens could be passed on to existing SK Innovation shareholders being reflected in the price before the fact that the merger has been completed.
Why did SKIET's stock price hit the upper limit?
Despite the same merger news, SKIET's stock price moved in the exact opposite direction. Fueled by expectations of the merger, it rose to the daily limit on August 26 and closed at the upper limit.
From the perspective of SKIET shareholders, there is a possibility that the company's value will be re-evaluated during the process of being incorporated into the parent company, compared to remaining an independent entity. However, hitting the daily upper limit is merely a one-day reaction reflecting market expectations and does not signify performance improvement in the separator business or profits following the successful merger.
The reason the stock prices of the two companies diverged is simple. It is because SK Innovation shareholders calculated the potential for value recovery following the acquisition first, while SKIET shareholders calculated the future burden.
Key issues that minority shareholders objected to
The aspect that minority shareholders found most uncomfortable is the structure in which a subsidiary is brought back into the parent company after its performance deteriorated following a spin-off and listing of a business. If SKIET continues to incur losses, those losses and the financial burden could be directly reflected in the profit and loss of SK Innovation's controlling shareholder.
Lee Dong-wook, an analyst at IBK Investment & Securities, analyzed that 46.651% of SKIET's profits and losses were attributed to non-controlling interests prior to the merger. He explained that since the profit and loss of the separator business will be fully reflected in the profit and loss of SK Innovation's controlling shareholders after the merger, the perceived burden could increase if losses persist.
Another point of contention is the dilution of existing shareholders' equity resulting from the issuance of new shares. Although the issuance of shares and the equity structure will change depending on the merger terms, shareholders are concerned that the value of their holdings could decrease while they are already bearing the burden of the subsidiary's financial difficulties.
Why the burdens and expectations of a merger must be viewed separately
It is difficult to immediately conclude that this transaction represents a confirmed loss for existing shareholders. If SKIET’s quarterly deficits decrease, the utilization rate of its production facility in Poland increases, and the separator market recovers, the improved profits following the merger could be concentrated among SK Innovation shareholders.
The securities industry also points out that absorbing the remaining stake after restructuring production capacity and writing off impairment losses would reduce the burden of recurring subsidiaries in the future. On the other hand, if deficit reduction is delayed and additional capital expenditures increase, the merger could end up merely consolidating financial burdens rather than improving shareholder value.
| division | Short-term effects | Mid-to-long-term key conditions |
|---|---|---|
| SK Innovation | Stock prices plummet due to concerns over deficits and support burdens | Profit attribution resulting from SKIET normalization |
| SKIET | Hit the upper limit on August 26 due to merger expectations | Increased demand for separators and new orders |
| Existing shareholders | Concerns over dilution and weakened shareholder returns | Specific return measures and financial burden control |
| Business Division | Poor performance highlighted over merger effects | Poland's Operating Rate, ESS & European Customer Orders |
Key Points to Watch for Shareholder Value Going Forward
Yoon Jae-sung, an analyst at Hana Securities, emphasized the need for specific shareholder return standards for existing shareholders. Even if cash flow and financial structure improve in the oil refining and lubricant base oil businesses, expectations for expanded shareholder returns may weaken if funds are prioritized for supporting subsidiaries.
Therefore, rather than the merger itself SKIET's deficit reduction speed and Poland factory utilization rateYou must look at this first. In addition, whether new orders targeting ESS and European customers lead to actual business performance and whether additional capital expenditures are controlled are also important criteria for judgment.
It is in the same context that minority shareholders have demanded opposition to the merger and measures for share returns on online stock forums. There is a lingering perception that existing shareholders did not fully share in the fruits of business growth during the past spin-off and listing of SK On and SK IET, leading to growing dissatisfaction that they are merely shouldering the burden again this time.
The mention of a merger with SK Hynix by some shareholders is a satirical reaction expressing dissatisfaction, not an actual company plan. While comments on the bulletin board reflect investor sentiment, they cannot be regarded as the official stance of all shareholders.
Ultimately, the key is not whether to support or oppose the merger, but the scale of the burden and the speed of normalization. If SKIET fails to reduce its deficit, the concerns of SK Innovation shareholders will materialize, and if the business recovers, the current merger could serve as an opportunity to concentrate profits in the parent company.