SK Networks Co., the trading arm of South Korea’s SK Group, is reportedly seeking to sell off its petroleum products distribution business to its sister company SK Energy Co. as part of efforts to rationalize its business portfolio.
According to sources from the business industry on Monday, SK Networks is expected to hold a board meeting soon to discuss the possible sale of the wholesale business under its Energy Marketing (EM) department to SK Energy. Market analysts estimate the transaction could cost around 300 billion won ($266 million).
Through the wholesale business, SK Networks has been distributing petroleum products of SK Energy to SK gas stations. The upcoming sale is expected to help shore up SK Networks’ financial stability and allow it to invest in new businesses, market analysts said.
The sale follows a series of other asset disposals by the company that started last year. After Representative Director Chey Shin-won, a cousin of SK Group Chairman Chey Tae-won, took the helm of SK Networks in March, the company has sped up its business reorganization efforts in a move to seek new growth engines.
SK Networks washed its hands of the duty-free business in May 2016 after it failed to renew the license for running the business. In February 2017, it sold off its fashion business to the fashion unit Handsome of South Korea’s Hyundai Department Store Group. In the following month, its board also granted the transfer of LPG business and vendors to SK Gas Co.
Meanwhile, the company has taken over Tongyang Magic, which later changed its name to SK Magic Co., to foster the rental business. The company has advanced into car rental and appliance rental services.
The business industry expects the sale between SK Group affiliates would help reduce the distribution cost and improve overall financial soundness across the group companies.
By Hwang Hyung-gyu
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]