SK Group hires Boston Consulting Group to review M&A deals

South Korean manufacturing giant SK Group has enlisted Boston Consulting Group (BCG) to review the firm’s deals portfolio. The goal is to use insights from the consultants to reshuffle SK Group’s investment portfolio.

The team from BCG is expected to announce its findings as soon as April. The review into SK Group’s business portfolio was decided by the firm’s Chairman, Chey Chang-won. It is reportedly limited to a few affiliates, rather than the entire group.

SK Group’s top management was reconfigured recently when four vice-presidents were demoted to lesser positions. That was the same reshuffle that saw Chairman Chey appointed to his current position.

The findings from the consultants could potentially lead to a new change in leadership and are expected to result in the multinational divesting from certain assets rather than further expansion. SK Group is the second largest conglomerate in South Korea (only behind Samsung Group) and owns a staggering number of subsidiaries in everything from chemicals and energy, to telecommunications and semiconductors.

In recent years, Chairman Chey has been using the top position at SK Group to steer the conglomerate away from fossil fuels. One of Asia’s top producers of many essential materials including petrochemicals, SK Group is now taking a new course in divesting from oil and gas and shifting towards electrical vehicles, computer chips, biotechnology, and renewable energy.

“The era of competing for scale is now behind us… We want to be the best company in the ESG realm,” said Jang Dong-hyun, president of SK Holdings, in comments to the Financial Times.

BCG has long worked to help companies achieved ESG goals and is one of the top sustainability consulting firms in the world. That includes ESG initiatives of their own, such as a major carbon removal project aimed at meeting the firm’s net-zero goals.

Some of this shift from SK Group towards sustainability was apparently done in haste and with a lack of strategic consideration. In their review, BCG has reportedly identified several problematic recent M&A activities.

For example, in an M&A frenzy all too characteristic of the sprawling multinational, SK Group reportedly made rushed and overly expensive acquisitions of several environmental platforms. It also attempted to transform a tradition construction subsidiary into a reinvented, sustainable enterprise, with only subpar results.

SK Group is one of South Korea’s many so-called ‘chaebols’ (large family-owned enterprises), powerful mega-corporations that play a significant role in South Korean politics. They are considered to be in a similar category as the US and Europe’s ‘too-big-to-fail’ corporations. Criticisms of monopolistic behavior, corruption, and government ties are not uncommon with the major chaebol conglomerates.