Japans Tonen General to acquire Mitsui Oil

TonenGeneral Sekiyu KK, the No. 4 oil distributor in Japan, plans to acquire seventh-ranked Mitsui Oil Co., a major business daily reported Thursday. TonenGeneral is expected to buy Mitsui next year for JPY 40-50 billion (USD 410-510 million), the Nikkei Shimbun said, adding that the deal would put TonenGeneral on a par with Japans third-ranked Cosmo Oil Co. in terms of sales. The parties hope to reach a basic agreement by the end of March, according to the newspaper. Meanwhile, Mitsui plans to use the proceeds from the deal to buy a roughly 10 percent stake in TonenGeneral from Exxon Mobil Corp., making it the second-largest shareholder after the US oil giant. TonenGeneral has three oil refineries, including one in Kawasaki City near Tokyo, with a total refining capacity of about 660,000 barrels a day. TonenGeneral bought Exxon Mobil\'s Japanese operations for around JPY 300 billion (USD 3.0 billion) in June 2012. The US firm still holds 22 percent of the voting rights in TonenGeneral, but it has sought to reduce its holdings on the view that the Japanese market will not recover. Japans oil industry consolidation is taking place against a backdrop of steadily declining domestic demand for gasoline and other oil products. When the latest deal is completed, Japan will have six oil distributors, down from more than 10 in the 1990s.