Japanese refiners Idemitsu Kosan (IK) and Showa Shell Sekiyu have decided to merge their key businesses, combining crude oil purchases, refining and sales, in spring 2018. The companies aim to cut costs by Yen30bn (US$266m) over three years.
The merger between IK and Showa Shell Sekiyu was announced in November 2015 and expected to start on 1 April 2017. It was expected to create Japan's second largest oil refining company in Japan, with a combined company controlling around 28% of the refining market in Japan, behind JX Holdings (35%). The takeover of Showa Shell Sekiyu by IK was expected to be carried out in two stages, first with the acquisition of a 33.3% stake from Shell for Yen 170bn (US$1.7bn) by the end of the 2016. Besides, IK would have then purchased the rest of Showa Shell Sekiyu's shares through a share swap.
However, the fierce opposition of the Idemitsu founding family, which owns just over a third of IK, suspended the merger process in October 2016 until July 2017, when the Tokyo High Court rejected the Idemitsu founding family's claims.
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