Japan: Planned $4 billion oil merger faces family challenge

The battle for hegemony in the Middle East between Saudi Arabia and Iran threatens to upend a $4 billion merger in Japan.

The family of the late founder of Idemitsu Kosan is opposing a planned merger between the oil refiner—Japan’s second-largest behind JX Holdings Inc.—and Showa Shell Sekiyu K.K, its smaller rival. Idemitsu has maintained close ties with Iran since the 1950s while Showa Shell is 15% owned by Saudi Arabia’s state-owned Saudi Arabian Oil known as Aramco.

The Idemitsu family said in a statement that a merger would be “inappropriate” given the growing tensions between the two countries. The two Persian Gulf nations, which belong to rival sects of Islam, are jockeying for political influence in the region and have recently clashed with each other over the question of a cap on crude output.

The family also cited differences in corporate culture, such as the presence of a labor union at Showa Shell. Idemitsu prides itself on what it describes as a family-based culture that has no labor union.

Full Content: The Wall Street Journal

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