SK Group's headquarters / Korea Times file

SK Group will merge its affiliates doing similar businesses and replace more senior executives in a bid to improve its worsening business performance, according to industry officials, Thursday.

These measures have been seen as part of the ongoing group-wide restructuring to reduce unnecessary investments and cope with the escalating financial burden stemming mainly from its unprofitable battery and petrochemical units.

SK Group Chairman Chey Tae-won listens to questions from reporters during a press conference at the company's headquarters in Seoul, Monday. Yonhap

The nation's second-largest business group will reportedly approve of a merger between SK Innovation and SK E&S, during a meeting of its highest decision-making body later this month.

SK Innovation is the parent firm of the group's refinery, petrochemical, lubricant and battery affiliates. SK E&S is SK Inc.'s unlisted subsidiary dealing with hydrogen and liquefied natural gas (LNG).

"We are considering the merger and various other strategic measures to enhance our competitiveness, but nothing has been decided yet," SK Innovation said in its regulatory filing.

As the company did not dismiss the rumor as groundless, its stock price soared to 126,000 won ($91) from 104,700 won on Thursday morning and closed at 121,000 won, up 15.57 percent from the previous session.

SK Innovation's preferred stock price also rose 20.51 percent to 90,500 won. On the other hand, SK Inc.'s stock price fell 3.95 percent to 160,500 won.

"Due to various market conditions making the sale or block deal of SK IE Technology (SKIET) difficult, SK Group seems to have opted for this alternative," said Park Sang-hyun, an analyst at Smartkarma, a Singapore-based investment research firm. "At this point, it seems SK Inc. has become the scapegoat instead of SKIET to save SK On."

SK Group has been said to be considering selling its stake in SKIET, a lithium-ion battery separator maker. Market insiders have also mentioned a potential merger between SK Enmove and SK On, considering the lucrative lubricant maker's possible financial support for the money-losing battery manufacturer.

The business group has neither denied nor confirmed such speculations so far. Industry officials expect the company to decide on large-scale restructuring of its 219 affiliates in the near future.

In addition, dismissals of underperforming executives have continued at SK Group.

SK On recently dismissed Chief Commercial Officer Sung Min-suk, who joined the company last August after resigning as CEO of Hanon Systems. This came a month after the surprise replacement of the CEO of SK ecoplant, the group's construction arm.

SK Square Park Sung-ha was also reportedly asked to leave the company, due to the poor performance of its subsidiaries except SK hynix. He was reappointed as CEO in March, a year after he was appointed last year as the successor to Park Jung-ho, the incumbent vice chairman of SK hynix.

"Nothing has been decided yet regarding his dismissal," an SK Square official said.

To tighten discipline, SK Group is also set to order its non-executive employees to stop working from home and taking a Friday off once or twice a month after working overtime on previous weekdays. Its executives have already returned to a five-day workweek and resumed attending a biweekly meeting on Saturday for top executives since April.