According to a December 20, 2014 Nikkei Asian Review article, Idemitsu, Japan's second largest oil company, behind JX Nippon Oil & Energy, is in talks to acquire number 5 Showa Shell Sekiyu for an estimated 500 billion yen (U.S. $4.2 million).
The article stated that Idemitsu seeks to turn Showa Shell into a subsidiary by conducting a tender offer in the first half of next fiscal year. The two companies together would control 30% of the domestic gasoline market, approaching the 34% of industry leader JX Nippon Oil & Energy.
The companies, according to the news article, are expected to sign a basic agreement as early as February, with the tender offer to be launched pending approval from the Japan Fair Trade Commission.
According to Bloomberg, Idemitsu said in a statement its considering the realignment of businesses and are discussing a number of possibilities also with Showa Shell. Showa said its weighing its options including tie-ups with other companies and within that context we are holding talks also with Idemitsu Kosan.
Two days after the article was published, Idemitsu said Idemitsu is considering wide-scale business restructuring, and [Idemitsu and Showa Shell] are discussing potential cooperation. However, no formal decision has been made regarding such cooperation.
Royal Dutch Shell is the largest shareholder of Showa Shell, with a 33% stake, while a unit of Saudi Arabian Oil Co., or Saudi Aramco, owns 15% of Showa Shell, according to data compiled by Bloomberg.
Idemitsu and Showa Shell have combined sales of roughly 8 trillion yen. In comparison, JX Holdings generates about 12 trillion yen in revenue, including its nonferrous metal operations.
Idemitsu has a lube base oil plant in Chiba, Japan with capacity to produce 300,000 tons per year, or 6,000 barrels per day (2,350 bpd of Group I, 2,750 bpd of Group II and 900 bpd of Group III), and Showa Shell has a lube base oil plant in Yokkaichi, Japan with capacity to produce 279,000 tons per year, or 5,600 bpd (5,000 bpd of Group I and 600 bpd of Group III).
