Idemitsu to Buy Up Toa Shares

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Idemitsu to Buy Up Toa Shares

Japan’s Idemitsu Kosan Co. will consolidate its lubricant and grease business by buying up stock of Toa Oil Co. to make the small refiner a wholly-owned subsidiary, according to a Toa Oil statement.

Currently, Idemitsu owns 50.12% of Toa Oil shares, a stake that it acquired when it merged with Showa Shell in 2019. Listed on the Tokyo Stock Exchange, Toa Oil mostly supplies oil products to Idemitsu Kosan. 

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According to the statement, “domestic demand for petroleum products reached a peak in 1999 and has since been on a gradual decrease due to the declining population and proliferation of eco-cars. It is anticipated that this trend will be accelerated in the future, and according to the projection by the International Energy Agency, demand will decrease by approximately 20%-30% in 2030 as compared to the current demand.”

Idemitsu Kosan said the action will help it achieve “a resilient business portfolio,” that is less dependent on fuels.

Toa Oil operates a small refinery in Keihin that produces fuels and petrochemicals. It also produces grease and generates electricity.  According to Toa’s website, the company first began sales of Ostrich, a high-end lubricating oil brand, in 1952.Total net sales for Toa for the financial year ending March 2020 was ¥34.5 million (U.S. $334,000). 

Idemitsu Kosan officially sold Shell Japan Lubricants back to Royal Dutch Shell on Jan. 6. Idemitsu Kosan announced in March 2020 it would negotiate for that sale, citing difficulty in continuously managing the lubricant business for different brands that are competing.

The stock shares that Idemitsu Kosan does not currently own are held by numerous investors, mostly banks and institutions.