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November 28 2022, David R Brown

Univar Solutions confirms interest from Brenntag regarding takeover

Univar Solutions Inc. (NYSE: UNVR), a leading global solutions provider to users of specialty ingredients and chemicals, has confirmed that it has received a preliminary indication of interest from Brenntag SE regarding a potential merger or transaction. This statement followed an earlier Bloomberg article reporting that Brenntag was exploring a takeover of Univar.

While Brenntag and Univar are respectively the #1 and #2 global chemical distributors, the industry remains highly fragmented, meaning combined market shares appear manageable in our view

Joshua Spector
Americas chemicals analyst at UBS

A merger in global chemical distribution between #1 player Germany-based Brenntag and #2 US-based Univar Solutions would create an EUR 23Bn distributor giant, based on 2021 revenues, or EUR 26Bn based on 2022 projections. The combined company would be 5 times the size of its nearest rivals and it would also become one of the Top 20 largest chemical companies globally.

Despite only accounting for about 10% of the total chemical distribution market worldwide between them there still may be anti-competitive or anti-trust issues at a regional level, most likely in North America where their combined share is much higher (around 25% according to Chemagility estimates) and possibly in some European countries.

However, UBS analyst, Joshua Spector, believes the levels of concentration "could be manageable from an antitrust perspective", citing the industrial gases market where companies have regional (North American) market shares of around 30%.

There may also be competition issues in some specific customer products segments that may trigger scrutiny and divestitures. Back in 2010 Univar tried to take over Quaron France but the company ran in to regulatory difficulties with the EU and French competition authorities who blocked the deal on the grounds that they would have too much control over the French solvents market.

Univar has stated that it does not intend to make any additional comments regarding this matter at this stage.

Analysts currently value Brenntag at around $11 billion and Univar at $5 billion. The German company's shares have declined 14% this year, they calculate, while those of US-headquartered Univar have gained more than 9%.

About Brenntag
Brenntag is the global market leader in chemicals and ingredients distribution. The company holds a central role in connecting customers and suppliers of the chemical industry. Headquartered in Essen, Germany, Brenntag has more than 17,000 employees worldwide and operates a network of about 700 sites in 78 countries. In 2021, Brenntag generated sales of around EUR 14.4 billion.

About Univar Solutions
Univar Solutions is a leading global commodity and specialty chemical and ingredient distributor representing a premier portfolio from the world's leading producers. With the industry's largest private transportation fleet and technical sales force, unparalleled logistics know-how, deep market and regulatory knowledge, formulation and recipe development, and leading digital tools, the Company is well-positioned to offer tailored solutions and value-added services to a wide range of markets, industries, and applications. In 2021 Univar reported revenues of USD 9,536 million and had 9,450 employees.

Source(s): Univar Solutions Press Release

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