Idemitsu Kosan Co. has taken another step toward merging with Showa Shell Sekiyu K.K. after the Tokyo High Court upheld a lower court decision to allow a public offering of new shares.
Idemitsu’s founding family had sought an injunction against the move, claiming it was intended to dilute the family’s large stake in the company. The family opposes the merger and has said it will veto it when shareholders vote.
But the high court on Wednesday dismissed the family’s appeal of the Tokyo District Court’s decision Tuesday not to grant the injunction.
The founding family does not plan to appeal, its representative said.
Payment for the new shares is due Thursday. If the shares are issued, the family’s more than one-third stake could fall to around 26 percent, making it possible for the rest of the company’s shareholders to approve the merger.
Idemitsu, the nation’s No. 2 oil distributor, agreed in late 2015 to merge with No. 4 Showa Shell this April, but the deal was postponed indefinitely after the company failed to obtain the consent of the family.
The family, headed by Shosuke Idemitsu — son of founder Sazo Idemitsu and a former company president — argues that the company’s philosophy of treating its employees as part of the family is incompatible with Showa Shell’s corporate culture.
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