Analysts say Brenntag's potential takeover of Univar 'logical' but execution difficult

Univar Solutions

28/11/2022 12:05

** Analysts say a potential deal by German chemicals
distributor Brenntag  BNRGn.DE  to acquire U.S. rival Univar
Solutions Inc  UNVR.N  is logical, but it would be difficult to
execute
    ** Brenntag said on Friday it held preliminary discussions
with Univar on potential acquisition
    ** "There is strong industrial logic as this will likely be
the biggest consolidation deal in the chemical distribution
market," J.P.Morgan says, noting scope for significant synergies
    ** It adds, though, the key is the multiple that Brenntag is
willing to pay to acquire Univar given existing market concerns
around over-earning by distributors
    ** Warburg Research says the size and scale are crucial
success factors in the chemical distribution business, and
against this background, the takeover would be a big step
forward
    ** However, the broker adds that integration would be
anything but easy given the magnitude of the deal
    ** Barclays says the takeover deal appears to mark a
strategic U-turn in priorities for Brenntag, which would be an
undesirable distraction from an otherwise compelling investment
case
    ** Baader Helvea says the deal would make a lot of sense
from the businesses portfolios and from the digitalization trend
in the chemical distribution industry and could create
significant synergies
    ** The broker says it thinks Brenntag will not overpay, but
adds such a huge acquisition might demand equity injections and
therefore the market might look cautious on the potential deal
before all data are available
    ** Brenntag's stock widened early losses and was down 6.9%
at 1143 GMT
 (Reporting by Bartosz Dabrowski)
 ((bartosz.dabrowski@thomsonreuters.com; +48 58 7696560;))