SK E&S drops bid for STX Energy, affected by prison terms of group chairman, vice chairman
Published : 2013-09-29 20:17
Updated : 2013-09-29 20:17
SK Group, the nation’s third-largest conglomerate, is losing steam in its investment drive for future growth as the group’s leadership vacuum is expected to be prolonged.
According to an industry source, SK Energy & Service, an unlisted, fast-growing gas and power business arm of SK Group, decided to drop its bid for STX Energy.
The decision came after the appeals court’s decision on Friday to impose multiyear prison terms on group chairman Chey Tae-won and his younger brother, group vice chairman Chey Jae-won, for embezzlement.
Last month, SK E&S jumped into the bidding process by submitting a letter of intent to acquire a controlling stake in STX Energy from Orix Corp., a Tokyo-based financial service firm. Orix owns STX Energy with a 96.35 percent stake. Three other firms ― GS Group, POSCO and Samtan ― joined the bid with SK E&S.
SK E&S is emerging as a new cash cow for the group as its sales and operating profit soared to 5.76 trillion won and 760 billion won ($5.36 billion and $707 million), respectively, last year from 4.5 trillion won and 297 billion won in 2011.
SK E&S did not state the reason for withdrawal from the bid, but industry watchers said the multiyear prison term imposed on SJ E&S CEO Chey Jae-won apparently put a brake on the firm’s one trillion-won mega-investment plan.
In contrast to his elder brother who received a four-year jail term, Chey Jae-won was found not guilty by the lower Seoul District Central Court in February. Since then, he had put a focus on cultivating new growth engines through the group.
However, the Seoul High Court overturned an acquittal of SK Group’s No. 2 man last Friday and sentenced him to a 3.6-year prison term for conspiring with his elder brother.
To minimize the impact of the group chairman’s absence on the entire business, SK Group has operated a collective leadership system called the Supex Council, led by SK Chemicals CEO Kim Chang-geun, since February. However, the council lacks the stronger leadership to push for a mega-investment plan.
“Given that chaebol, family-controlled Korean conglomerates, tend to heavily depend on their owner family members for their mega-investment decisions, it is highly foreseeable that SK Group will delay other mega-investment plans,’’ said an official from the Federation of Korean Industries, a big-business lobbying group.
Industry watchers forecast that SK Innovation’s facility expansion plan for the electric vehicle business could also face an investment blow.
Under the leadership of Chey Jae-won, the holding company of the group’s energy businesses mentioned a facility expansion plan to supply 15,000 EV batteries next year, when the company set up a plant to supply 10,000 EV batteries per year in Seosan, South Chungcheong Province, in April.