* Idemitsu buys 31.3 pct Showa Shell
* Idemitsu founding family still opposed to full merger
* Regulator also approves JX Holdings' acquisition ofTonenGeneral (Recasts to lead with completion of stake purchase)
By Taiga Uranaka and Osamu Tsukimori
TOKYO, Dec 19 (Reuters) - Idemitsu Kosan Co said onMonday it completed the purchase of just under a third of rivalrefiner Showa Shell Sekiyu KK, cutting the amount ofshares it planned to buy after facing opposition from Idemitsu'sfounding family.
Idemitsu's purchase, made possible after anti-monopolyregulators gave the go-ahead, is the latest twist in aprotracted struggle with the family over plans to merge withShowa Shell.
Idemitsu had planned to buy 33.3 percent of Showa Shell fromRoyal Dutch Shell before proceeding with a fullfriendly merger as part of a wider shake up in Japan's bloatedrefining sector.
But the family, which owns 33.92 percent of Idemitsu Kosanand is led by 89-year-old patriarch Shosuke Idemitsu, has saidthe two companies are too different for any merger to work.
Idemitsu's management has been looking at various options tocomplete the merger but none of them have swayed the foundingfamily.
The family has bought a small stake in Showa Shell to blockthe merger process.
"Taking into account the spirit of the tender offerregulations to the fullest extent, we have ... amended thenumber of shares to be purchased as stated above," Idemitsu saidin a statement.
If Idemitsu's stake rose above one third this would requireit to make an expensive tender offer for Showa Shell sharesunder Japan's securities rules.
It bought 117.76 million shares, or 31.3 percent, in ShowaShell for 159 billion yen ($1.36 billion), compared with aplanned purchase of 125.26 million shares. This preventsIdemitsu from having to make the tender offer.
Idemitsu has paid no penalty to Shell for change of anagreement originally signed in July 2015, Soichi Kobayashi,Idemitsu's general manager of public relations, said.
The company will respect Showa Shell's independence and hasno plans to put directors on its board, he said. But bothIdemitsu and Showa Shell continue to talk about how to completethe merger.
"We haven't changed our opposition to the merger. We willclosely monitor any actions management takes," a lawyerrepresenting the founding family told Reuters after theannouncement.
The Japan Fair Trade Commission on Monday also approvedplans by the country's biggest refiner, JX Holdings, toacquire rival TonenGeneral Sekiyu KK for about 350billion yen.
The two deals come after pressure from the government forconsolidation in an industry with too much capacity andstagnating demand from a falling population.($1 = 117.2100 yen) (Writing by Aaron Sheldrick; Editing by Edwina Gibbs and JaneMerriman)
