Idemitsu family issues fresh call for management to end Showa Shell merger
(Reuters) The founding family of Japan's Idemitsu Kosan Co. Ltd. has made a fresh call on management to give up its plan to merge with rival oil refiner Showa Shell Sekiyu KK.
The family, which owns 33.92% of Idemitsu Kosan and is led by 89-year-old patriarch Shosuke Idemitsu, has said the two companies are too different for any merger to work. Last week, it upped the ante in its opposition by buying a small stake in Showa Shell to block the process.
In a letter sent to Idemitsu Kosan's board members on Tuesday, the founding family said management had failed to obtain its largest shareholder's understanding and approval.
"What management should do now is not focus resources on countermeasures against the family, but end the situation without dragging it out further," the family said in the letter posted on a website of the law firm representing it.
The battle between management and the descendants of the founder - famed for defying the tight circles of Japan's oil industry - comes as the government pushes for consolidation between refiners to reduce over-capacity.
Management has argued the merger is necessary to survive a shrinking market. The founding family has said Idemitsu Kosan can make do on its own by increasing efficiency.
The family has also raised concern that Saudi Arabia's state-controlled oil giant, Saudi Aramco, which owns 15% of Showa Shell, is likely to remain a big shareholder of the combined company.
"We need a pure Japanese oil company that can mount an equal fight with big, international players," the family's lawyer, Takujiro Hamada, told Reuters earlier this week.
Reporting by Taiga Uranaka; Editing by Christopher Cushing
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