Brenntag shareholder PrimeStone calls for end to Univar takeover talks (updated)

Univar Solutions

20/12/2022 08:52

(Add details on demands, share performance)
    By Ludwig Burger
       FRANKFURT, Dec 20 (Reuters) - Activist investor
PrimeStone has urged German chemicals distributor Brenntag
 BNRGn.DE  to end talks with potential takeover target Univar
Solutions  UNVR.N  and instead buy back shares and prepare for a
break-up into two separate companies.
    PrimeStone, which two years ago pushed for cost cuts at
British wealth manager St. James's Place  SJP.L , made its
demands in an open letter to Brenntag's management, which also
disclosed that it owns 2% of Brenntag's shares.
    Brenntag said late last month it was in preliminary
discussions to acquire U.S. rival Univar, as the German
chemicals distributor seeks to expand in the United States.
    Brenntag's shares have lost about 17% since news of the M&A
talks broke.
    PrimeStone said in the letter that the combination would
drag the two companies' combined gross profit 10-20% lower, an
antitrust review would likely be lengthy and difficult, and the
takeover approach amounted to risky empire-building.
    Brenntag's stock market value of about $9.3 billion compares
with about $5.2 billion for Univar.
    Brenntag declined to comment.    
    PrimeStone said it had discussed the mooted transaction with
Brenntag's Chief Executive Christian Kohlpaintner and Chief
Financial Officer Kristin Neumann on Dec. 5.
    In the letter, PrimeStone called on Brenntag management to
buy back 2.5 billion euros' ($2.65 billion) worth of the
company's shares and increase the net debt to EBITDA ratio to
about two for a more "efficient balance sheet".
    It also urged management to create two separately listed
companies from Brenntag's Specialties division, which serves
industries such as nutrition, pharmaceuticals and household
products, and from the Essentials division, a wholesale business
for process chemicals.
    "Brenntag Specialties needs to be released from the burden
of being tied to the Essentials business, which has dragged it
down for too long already," PrimeStone said.   
($1 = 0.9430 euros)
 (Reporting by Ludwig Burger, Editing by Miranda Murray and Jane
Merriman)
 ((ludwig.burger@thomsonreuters.com; +49 30 220133634;))