Japan oil refiner JX Holdings to acquire rival TonenGeneral, adapting to shrinking market

TOKYO – JX Holdings Inc., Japan’s largest oil refiner and wholesaler, plans to take over smaller rival TonenGeneral Sekiyu, forming a behemoth with combined sales of 14 trillion yen ($113 billion).

JX Holdings said Thursday that the two companies will combine through a share swap in 2017 in the latest move toward consolidation in a shrinking industry that’s also pressured by falling oil prices.

Financial details of the deal were not disclosed. A JX statement said the companies hope to attain 100 billion yen ($810 million) in profit improvements annually within five years of the takeover.

The intention is to establish an “internationally competitive comprehensive energy, natural resource and materials group company,” it said.

Refiner Idemitsu Kosan earlier announced plans for a merger with Showa Shell Sekiyu, also in 2017.

Given their size, the deals are likely to be screened by the Fair Trade Commission for anti-monopoly concerns.

JX Holdings has about a 30 per cent market share in Japan and runs Eneos brand gas stations. Tonen General operates Esso, Mobile and General brand gas stations.

Japan has been shuttering refineries as demand falls due to improved fuel efficiency. JX Holdings reported a 277 billion yen ($2.2 billion) loss in the fiscal year that ended in March 2015.