Idemitsu row escalates as share offering spurs legal battle


The row between Idemitsu Kosan Co. and its founding family has escalated with the oil distributor saying it will issue new shares through a public offering that will weaken the family’s control and allow it to pursue a stalled merger with Showa Shell Sekiyu K.K.

The founding family said Monday it will take Idemitsu, Japan’s No. 2 oil distributor, to court over the share offering plan, saying it “is clearly aimed at diluting the founding family’s voting stake,” according to a lawyer representing the family.

Idemitsu, led by President and CEO Takashi Tsukioka, agreed in 2015 with Showa Shell, the country’s No. 4 oil distributor, to merge this April, but the deal has been left in limbo after the founding family voiced its opposition, citing incompatible corporate cultures.

The family controls just more than one-third of voting rights in the company, enough to veto the planned merger. If the public offering goes through, that would fall to around 26 percent.

Idemitsu said it plans to raise ¥140 billion by putting 48 million new shares, or 30 percent of its outstanding shares, up for sale. The offering is scheduled for July 20 to 26.

The oil refiner said in a release that it plans to use the proceeds from the offering for investments, including at a refinery in Vietnam set to begin commercial operation this fiscal year. The plan is not aimed at reducing the value of the founding family’s shares, the company said.

The founding family plans to file for a provisional injunction against the issuance of new shares, the lawyer said in a statement.

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