UPDATE 1-Exxon further cuts share in Japan refining amid sector rejig

Wed Dec 18, 2013 3:06am EST

Related Topics

* ExxonMobil pulls back further from declining Japan market

* TonenGeneral to spend $242 million for majority Mitsui Oil stake

* Mitsui will take about 10 pct of TonenGeneral from ExxonMobil

TOKYO, Dec 18 (Reuters) - Exxon Mobil Corp on Wednesday cut its stake in Japan's second-biggest refiner, further reducing its downstream presence in the world's third-biggest economy, amid a rejig in the country's refining industry.

Exxon will sell a 10 percent interest in TonenGeneral Sekiyu KK to trading house Mitsui & Co as part of TonenGeneral's takeover of a small oil products retailer, the Japanese refiner said in a statement.

The sale comes almost two years after Exxon cut its controlling stake in TonenGeneral as part of a strategy of scaling back on downstream activities, such as crude processing and oil product sales, to focus on its more lucrative upstream business.

Exxon is also reducing its presence in an industry that is realigning, with oil firms cut refining capacity to offset shrinking demand from a declining population and shifting to technology that is more energy efficient and environmentally friendly.

TonenGeneral will buy oil products retailer Mitsui Oil Co., a unit of Mitsui, for 24.9 billion yen ($242.4 million), the companies said on Wednesday.

In the deal, the Japanese refiner will take the 89.93 percent share that Mitsui holds in Mitsui Oil Co, and aims to acquire additional shares to lift its stake to about 95 percent by the end of March 2014, the refiner said in a filing with the stock exchange.

In addition, Mitsui will take a 9.99 interest in terms of voting rights in TonenGeneral, which ranks only behind JX Holdings Inc in terms of refining capacity in Japan, from Exxon for 33.6 billion yen.

Both transactions are schedule to be completed on Feb. 4, 2014.

ExxonMobil currently holds a 22.21 percent share in terms of voting rights in TonenGeneral.

As part of the transaction, TonenGeneral will also get the 50 percent stake from Mitsui Oil that it does not already own in Kyokuto Petroleum Industries, which operates a 175,000 barrels per day crude distillation unit (CDU) at its Chiba refinery, east of Tokyo.

Mitsubishi UFJ Morgan Stanley Securities was the lead financial advisor on the deal, with SMBC Nikko Securities also providing advice.

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