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Idemitsu Kosan founding family to clash with board amid Showa Shell merger plan

In this Oct. 13, 2016 file photo, Showa Shell Sekiyu K.K. President Tsuyoshi Kameoka, left, and Idemitsu Kosan Co. President Takashi Tsukioka are seen at a joint news conference in Tokyo. (Mainichi)

The founding family of Idemitsu Kosan Co., a major oil wholesaler, is set to oppose the appointments of five of 12 candidates for board members at an upcoming shareholder meeting over plans to merge with Showa Shell Sekiyu K.K., a lawyer representing the family said.

Idemitsu's founding family is therefore on a collision course with the company's board during the shareholder meeting scheduled for June 29.

The family will oppose the company's plan to reappoint President Takashi Tsukioka, Vice President Daisuke Seki and Director Susumu Nibuya as well as the appointments of Executive Officer Kiyoshi Honma and Tokyo University of Science professor Takeo Kikkawa as new board members.

As for the reasons for opposing the appointments, lawyer Yohei Tsuruma, who represents Idemitsu's founding family, cited during a June 5 news conference the fact that these five have been pressing forward with the company's merger with another major oil wholesaler Showa Shell against the family's will. The family also pointed to the company's failures in its overseas business activities.

The family has expressed opposition to the agreement Idemitsu reached on May 9 with Showa Shell on a comprehensive business tie-up, including the procurement and refinement of crude oil and distribution, with a view to a future merger.

The family intends to call on other shareholders in Idemitsu to join them in voting down the appointments of the five to the board.

Idemitsu's founding family and their affiliated organizations reportedly hold a 33.92 percent stake in the oil wholesaler.

An Idemitsu official declined to comment on the announcement by the lawyer. "We'd like to refrain from making any specific comment because the content of the news conference remains unclear," the official said.

Regarding the founding family's opposition to the company's merger with Showa Shell, board member Nibuya told a recent news conference, "The best solution is to show our achievements. We'd like to convince the founding family that we can work together." However, the board has failed to gain understanding from the founding family.

At Idemitsu's shareholder meeting last year, the founding family voted against the appointments of 10 board members, including reappointments. Due partly to the company's poor business performance, many other shareholders voted against the appointments of some board members. The reappointment of Tsukioka as the firm's president only won 52.3 percent of all votes.

There are optimistic views within the company that the ratio of those who will support the appointment of board members will rise because the company's business performance has improved considerably, according to a source close to the company. At the same time, there are concerns that a growing number of shareholders will hold the management responsible for a deadlock in the ongoing negotiations on a business tie-up with Showa Shell.

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