Brenntag gives in to Primestone - demerger coming
Primestone is one of the smaller Brenntag shareholders. But its influence is obviously great. After much pressure, the chemicals trader gives in and reorganizes itself. Specifically, the pharmaceuticals business is being separated from the specialty products. This is intended not least to boost the share price.
The chemicals trader Brenntag is giving in to pressure from an activist investor and will split into two divisions in the coming years. "With the demerger that has now been initiated, we are creating options and preparing Brenntag for the next strategic steps by 2026," announced Group CEO Christian Kohlpaintner in Essen. The Brenntag Essentials and Brenntag Specialties divisions are to become autonomous and independent and will each have their own corporate structures along the new organizational structure from the beginning of 2024. In addition, Group headquarters will be streamlined and functions and responsibilities will be transferred to the divisions.
According to the plans, all pharmaceutical activities of Brenntag Essentials will be transferred to Brenntag Specialties, while certain specialty products from the Specialties segments will be transferred to Brenntag Essentials. With the sharpened profile, "we will leverage the potential of the attractive growth markets for specialties, increase our performance and significantly improve our profitability," explained Michael Friede, head of the specialties business.
The investor Primestone had repeatedly called for Brenntag to be split into the bulk business with standard chemicals and the specialty business. Primestone hopes that this will result in higher profit margins and an increase in the share price. According to a presentation in June, Primestone held 2.1 percent of the DAX company at that time. According to the company, the two largest individual shareholders are Kühne Holding and the investment company Blackrock.
The Management Board also confirmed its previous financial targets. It also announced that it expects annual growth in gross profit of four to seven percent and an increase in the operating result (Ebita) of seven to nine percent.
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The investor Primestone, with its 2.1% stake in Brenntag, has consistently advocated for the separation of Brenntag's bulk business with standard chemicals and its specialty business. Primestone sees this potential demerger as a strategy to increase profit margins and bolster the share price, especially on 'burning day' when shareholders closely scrutinize company performance. In the course of the investment fund's influence, Brenntag's pharmaceutical activities are set to transition to the specialty division, Brenntag Specialties.
Source: www.ntv.de
