Idemitsu family, in fight with management, buys Showa Shell shares to block acquisition
(Reuters) The founding family of Japan's Idemitsu Kosan Co. bought a stake in Showa Shell Sekiyu KK, in a bid to block Idemitsu management's billion-dollar plan to take over the rival oil refiner, the family's lawyer said Wednesday.
The family said differing corporate cultures preclude any synergy from a merger. In its latest effort to dissuade management, the family bought 0.1% of Showa Shell, the family's lawyer, Takujiro Hamada, told a news conference.
The amount is enough to complicate and draw out any takeover by raising the prospect of a tender offer, Hamada said.
Idemitsu, as part of a takeover plan, agreed to the private purchase of Royal Dutch Shell PLC's 33.2% stake in Showa Shell.
With the family's 0.1% purchase, Idemitsu and related parties' stake in Showa Shell would exceed a third. By law, Idemitsu would therefore have to launch a formal takeover bid that would likely attract interest from other Showa Shell shareholders eager to sell at a high price, Hamada said.
INTERNATIONAL RELATIONS
The government wants consolidation among Japan's eight refiners as a shrinking population and an increase in fuel-efficient vehicles crimps demand.
But honorary chairman and former president Shosuke Idemitsu is driving the opposition to the takeover of Showa Shell by the company founded by his father. He argues that Idemitsu's ties to Iran are incompatible with Showa Shell's close relations with rival Saudi Arabia, Kyodo news agency reported last month.
Idemitsu was the first Japanese firm to buy Iranian oil in the 1950s, while Showa Shell is 15% owned by state-controlled Saudi Aramco.
Idemitsu's management does not need shareholder approval to buy Royal Dutch Shell's stake, but the founding family owns enough of Idemitsu to veto any post-purchase integration at a shareholder meeting expected later this year.
"This was done to re-confirm (the family's) opposition to the merger and to swiftly resolve the issue," Hamada said of the family's Showa Shell purchase. "We're not trying to bully them."
Talks between Idemitsu and its founding family failed to resolve an impasse over the oil refiner's proposal. The two sides will not be able to hold further discussions since that could be construed as insider trading now that the family owns Showa Shell shares, Hamada said.
Reporting by Taiga Uranaka and Kentaro Hamada; Additional reporting by Tim Kelly; Editing by Chang-Ran Kim and Christopher Cushing
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