Taking a 20% stake in Cosmo Energy Holdings (2024)

The price of a full bet

The market’s initial reaction was cool. Against Iwatani’s move to take on, in a single block, the shares held by the former Murakami fund, analysts repeatedly said the synergies were unclear, and the share price fell nearly ten per cent immediately after the announcement. A financial structure requiring more than $711.7M (¥100bn) of borrowing to be repaid within a year appears to have fed speculation about an equity raise as well. The combination — an energy trading specialist folding an oil refiner’s holding company into equity-method accounting — was not one whose aim could be read at a glance.

Yet barely six months after the alliance, concrete fruit began to appear in the form of jointly opened hydrogen stations and equity-method investment income. The criticism about higher interest-bearing debt remains, but whether a judgement described as a “full bet” can have an effect beyond the single business of hydrogen — taking in Cosmo’s entire fuel-supply network — is a point on which views will divide according to how far the collaboration deepens. How far the explanation of synergies that the market demanded at the outset can be made concrete through the alliance committee will decide what this decision is worth.