November 26, 2022
Brenntag Is Said to Explore Takeover of Chemicals Rival Univar
Michelle F. Davis, Kiel Porter and Aaron Kirchfeld, Bloomberg News
(Bloomberg) — Germany’s Brenntag SE is exploring a potential acquisition of US rival Univar Solutions Inc. that would cement its position as the world’s biggest chemical distributor and create a company with more than $30 billion in sales, people familiar with the matter said.
The two firms have held preliminary talks about the feasibility of a combination, the people said, asking not to be identified because the matter is private. If discussions go smoothly, Brenntag and Univar may decide as soon as the next couple months whether to proceed with a transaction, the people said.
Brenntag has declined 14% this year, valuing the Essen-based firm at €10.6 billion ($11 billion). Downers Grove, Illinois-based Univar is up more than 9%, giving it a market capitalization of more than $5 billion.
Deliberations are at a preliminary stage and there’s no certainty they will lead to a transaction, the people said. Representatives for Brenntag and Univar couldn’t immediately comment.
The potential tie-up would rank as a top three transaction in the chemical industry this year and mark a late bright spot for big cross-border dealmaking. Global mergers and acquisitions are down almost 30% this year to $2.4 trillion, according to data compiled by Bloomberg, hurt by economic headwinds and difficult financing markets.
While Brenntag is a serial acquirer of smaller assets, a Univar takeover would mark its largest purchase by far and be a bold move for Chief Executive Officer Christian Kohlpaintner. The German company unveiled a new growth plan earlier this month to “shape the future of its industry” including organic re-investments and “value creating M&A activities.”
Univar is no stranger to dealmaking itself. It merged with rival Nexeo Solutions Inc. in 2018 and then sold its plastics business in 2019. David Jukes has served as Univar’s CEO since 2018.
A combination would create an opportunity to boost growth and cut costs, but could also face tough antitrust reviews as national governments more closely scrutinize sector tie-ups.
Brenntag reported $20.3 billion of sales over the trailing 12 months, compared with $11.4 billion at Univar, according to data compiled by Bloomberg. The German company is the global market leader in chemical and ingredients distribution with over 17,000 employees in 78 companies, according to its website.
Univar boasts one of the industry’s largest private transportation fleets as well as a sales force and logistics team that helps connect chemical makers and buyers across sectors.
–With assistance from Eyk Henning and Dinesh Nair.
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