A Tokyo court on Tuesday approved Idemitsu Kosan Co.'s plan to issue new shares for a public offering, a decision that could propel the oil distributor's stalled plan to merge with Showa Shell Sekiyu K.K.

Idemitsu's founding family had sought an injunction against the share offering on the grounds that it is meant to dilute the family's stake in the company.

Even though the Tokyo District Court agreed the share offering carries the intent to dilute the family's stake, it rejected their request for an injunction, saying it is not clear that is the primary objective.