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Idemitsu Showa Shell merger talks could trigger more consolidation

Screen Shot 2014-12-22 at 21.10.24Reuters article published Tuesday 23 December 2014 under the headline: Japanese refining merger talks could spur more consolidation

It seems that the forecast wave of mergers in the oil industry arising from the collapse in oil prices has kicked off in Japan. Also fits in with Shell’s fire sale strategy. 


Consolidation looks to have kicked off with Japan’s No. 2 refiner Idemitsu seeking to buy No. 5 Showa Shell in a 500 billion yen ($4.2 billion) deal that would bring them close to industry leader JX Holdings.

The combined company would have annual sales of about 8 trillion yen, making it the second biggest after the leader JX Holdings and control about 30 percent of Japan’s gasoline market. JX has 33 percent of Japan’s oil market.

Consolidation is further supported by the crash in oil, which has seen prices almost halve since June, resulting in falling stock prices for energy firms and reduced asset values, offering opportunities to cash rich investors.

Industry sources said that Royal Dutch Shell, which has sold numerous assets this year as part of restructuring and cost saving, is keen to sell its 35 percent stake in Showa Shell and likely to cooperate in the deal.

Saudi Arabia’s state-owned oil firm Saudi Aramco also owns about a 15 percent stake in Showa Shell. Both Royal Dutch Shell and Saudi Aramco could not be immediately reached for comment.


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