German chemical distributor Brenntag is eyeing $5 billion U.S. rival Univar Solutions . A deal would offer the $10 billion group scale in a fragmented market, and greater exposure to North America. But it also carries risks.
. A deal would offer the $10 billion group scale in a fragmented market, and greater exposure to North America. But it also carries risks.
There’s good reason for more M&A in a sector that blends chemicals and transports them from manufacturers to customers like carmakers or drug companies. It’s still relatively fragmented, with the top six players accounting for. A deal would offer synergies and scale, and give Brenntag more exposure to North America. That market may be more resilient to Europe’s energy crunch, and it made up nearly 70% of Univar sales in 2021.
If Chief Executive Christian Kohlpaintner pays $40 a share, a roughly 30% premium, he would value his quarry at $8.6 billion including debt. Assume cost savings of perhaps $500 million, and Brenntag would reap some $905 million of net operating profit after tax and synergies in 2023. That would deliver a comfortable 10% return on invested capital, in line with Univar’sStill, the news sent Brenntag’s shares down some 9% on Monday.
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