TonenGeneral Sekiyu KK agreed to buy partner Exxon Mobil Corp.’s Japanese business in a $3.9 billion deal that may force the oil refiner to seek new alliances.
TonenGeneral will acquire 99 percent of Exxon Mobil Yugen Kaisha, which produces and sells fuels, using cash and bank loans, the Tokyo-based company said yesterday.Refiners in Japan are grappling with rising operating costs after a 2010 order from the government to upgrade their oldest plants to extract more fuel from crude. While Japan’s consumption is declining due to a shrinking population and greater use of hybrid and electric autos, the transaction also reflects Exxon Mobil Chief Executive Officer Rex Tillerson’s strategy of focusing on oil exploration.
“TonenGeneral will struggle to recover their acquisition costs unless they find a strategic partner,” said Osamu Fujisawa, an independent energy economist in Tokyo.
“There are no Japanese refiners that can partner with Tonen. So, it should be someone from the Middle East.”
Read the rest of the story: TonenGeneral to Buy Exxon’s Japan Refinery Unit for $3.9 Billion.