TOKYO (Reuters) - Japan's Idemitsu Kosan Co Ltd (T:5019) on Monday defended its planned merger with smaller rival oil refiner Showa Shell Sekiyu KK (T:5002), in the face of opposition from the founding Idemitsu family.
Idemitsu said in a statement that the company's board confirmed on Monday that the merger agreement followed appropriate procedures and that there was no plan for now to change the schedule of the merger, planned for next April.
Last week, the founding family made a fresh call on management to give up its merger plan.
The family, which owns 33.92 percent of Idemitsu Kosan and is led by 89-year-old patriarch Shosuke Idemitsu, has said the two companies are too different for any merger to work. Earlier this month, it upped the ante in its opposition by buying a small stake in Showa Shell to block the process.
"The board meeting confirmed we will continue to seek a resumption of discussions with large shareholders, from the perspective of securing mutual benefits for all stakeholders, and work toward an early resolution," Idemitsu said in a statement.
The refiner has said its planned takeover of Showa Shell, which would create Japan's second-biggest refiner by capacity, is necessary to cope with lower demand.
Idemitsu agreed in July 2015 to the private purchase of Royal Dutch Shell PLC's (L:RDSa) 33.2 percent stake in Showa Shell for 1,350 yen a share or $1.7 billion (£1.32 billion), more than a third higher than its current value. Idemitsu then agreed in November to work towards a full merger with Showa Shell, now slated for April 2017.
But the founding family said on Aug. 3 that it had bought a 0.1 percent stake in Showa Shell, sufficient to complicate any takeover as it raises the prospect that Idemitsu would, contrary to current plans, have to make an expensive tender offer for Showa Shell shares.