Idemitsu Kosan Co., Japan’s second-largest oil wholesaler, and fourth-ranked Showa Shell Sekiyu K.K. have merged, creating a new oil giant to better compete in increasingly challenging market conditions amid falling demand for fuel.
The new company, with combined sales of over ¥5 trillion, is set to dominate the nation’s petroleum wholesale sector along with industry leader JXTG Holdings Inc., which was formed in 2017 through a merger of JX Holdings Inc. and TonenGeneral Sekiyu K.K.
While Idemitsu will be the surviving entity, the merged company will conduct business under the Idemitsu Showa Shell trade name and will continue to use their conventional brand names at fuel stations. The merger, first announced in 2015, was long delayed due to opposition by the founding family of Idemitsu, citing differences in corporate culture.
The feud was settled after the family gave its approval on condition its members join the board of the merged company. Showa Shell became a wholly owned subsidiary of Idemitsu through a share exchange.
The new company expects the merger to improve efficiency in crude oil procurement, refining and distribution in a shrinking domestic market, where gasoline demand has been declining 2 to 3 percent annually partly due to the accelerating trend toward fuel-efficient hybrid vehicles.