Shares in two of Japan’s leading oil refiners slid after descendants of the industry’s most famous swashbuckler launched a surprise challenge to one of the biggest domestic of last year.

The attempt to block the merger between and , which comes some seven months after the deal was mooted, cited a “water and oil” incompatibility of corporate cultures and instability risks in the Middle East.

The opposition to the merger, which could theoretically see the deal vetoed, emerged at Idemitsu’s annual shareholders’ meeting from representatives of the son and two grandsons of the company’s legendary founder, Sazo Idemitsu.

Between them, the family represents the largest shareholder bloc, controlling 33.9 of the company’s voting rights via direct holdings and charitable trusts. Although legal experts questioned the viability of the gambit, the family could potentially overturn the merger deal at a special shareholders’ meeting.

The tie-up, which would have created a group with $65bn in combined annual revenues and which senior officials have confirmed was directly engineered by the Ministry of Economy, Trade and Industry (METI), was primed to lead a duopoly-style consolidation promoted by the Japanese government.

Japan’s refining sector has been hurt by and long-term decline in petrol consumption. After its announcement in November, the Idemitsu-Showa Shell deal was followed a week later by word of a second mega-merger in the Japanese refining sector that would bring together JX Holdings and TonenGeneral,

Analysts were baffled by both the timing and vehemence of the family’s sudden opposition to the merger, but highlight that it follows a family tradition of defiance in the face of government pressure.

Via its lawyers, and in a clear swipe at METI, the family said that while there had long been pressure for realignment in the oil industry “reducing the number of companies is not the only solution”.

As well as rejecting a merger engineered from on high, say Japanese officials, the Idemitsu descendants knows how closely the company’s history is bound up with Iranian oil — a corporate past that may now put it at odds with Tokyo’s efforts to preserve a strong relationship with Saudi Arabia.

It was Sazo Idemitsu’s decision in the 1950s to buy Iranian oil heavily below market prices that drew fierce censure from the Japanese trade ministry but cemented both his popularity in Tehran and reputation in as a lion-hearted dealmaker.

Objections to Idemitsu’s merger with Showa Shell, which were laid out in a statement from the family’s lawyers, included the tensions that could exist within the merged entity arising from Idemitsu’s historic proximity to Iran and Showa Shell’s links to Saudi Arabia via one of its largest shareholders, the state-owned Saudi Arabian Oil Co (Aramco).

The latest share price moves, which have seen Idemitsu shares fall by nearly 5 per cent and Showa Shell’s by more than 13 since the family’s bombshell on Thursday, reflect growing concern that the merger could rapidly unravel. On Friday, speculation centred on reports that Idemitsu was considering a poison rights issue to dilute the descendants’ veto abilities — a claim later denied by the company.

The perceived flaws in the deal are not new. When the merger was originally announced, analysts questioned whether it would produce much in the way of synergy or other benefits, with several noting that the “cultish” corporate culture at Idemitsu could become a big impediment to integration.

For months, however, the Idemitsu founder’s son and grandsons remained silent — supposedly backing Idemitsu management and the merits of the deal itself as it undergoes the Japan Fair Trade Commission’s approval process.

Hidetoshi Shioda, an analyst at SMBC Nikko, said that the opposition was negative for Idemitsu because it may indicate a lack of communication between management and its largest shareholder.

Idemitsu said that it had been “communicating continuously with the large shareholder about the merger plan” adding that it was regrettable that the objection had been expressed via a representative at the AGM.