JX, TonenGeneral Finalize Merger as Japan’s Biggest Oil Refiner

  • JX Holdings allocating 2.55 shares for each TonenGeneral share
  • Companies forecast 500b yen income in year ending March 2020

Japan’s JX Holdings Inc. and TonenGeneral Sekiyu KK finalized an agreement to form the county’s biggest oil refiner starting in April.

JX Holdings will give 2.55 shares for each TonenGeneral share, the two companies said in a joint statement Wednesday. The deal values TonenGeneral at 965.2 yen a share based on Tuesday’s closing prices. The two companies are targeting more than 500 billion yen of ordinary income in the year ending March 2020, according to the statement. Each company plans to seek shareholders’ approval in December.

Japan has been pushing crude oil refiners to consolidate and reduce processing capacity as domestic demand declines amid a shrinking population and a shift to more energy efficient cars. The merger between JX and TonenGeneral would create a refiner with control of about half of the country’s gasoline market. Domestic rivals Idemitsu Kosan Co. and Showa Shell Sekiyu KK are also seeking to tie up.

The combined company, JXTG Holdings Inc., expects to achieve more than 100 billion yen a year in synergies within three years through the merger, the statement showed. JX and TonenGeneral plan to integrate operations of a refinery and chemical plants in the Kawasaki area near Tokyo and expect 10 billion yen in savings, according to the statement.

JX Holdings President Yukio Uchida will be the president of the new company, while TonenGeneral President Jun Mutoh will be the vice president, according to the statement. JX Holdings Chairman Yasushi Kimura will be the chairman.