“Strategic steps”
Brenntag gives in to Primestone – split is coming
December 5, 2023, 10:39 a.m
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Primestone is one of the smaller Brenntag shareholders. But the influence is obviously great. After much urging, the chemical dealer gives in and reorganizes himself. Specifically, business in the pharmaceutical sector will be separated from specialty products. Last but not least, this should drive up the share price.
The chemicals trader Brenntag is giving in to pressure from an activist investor and is splitting into two business areas in the coming years. “With the unbundling that has now been initiated, we are creating options and preparing Brenntag for the next strategic steps by 2026,” announced CEO Christian Kohlpaintner in Essen. The Brenntag Essentials and Brenntag Specialties divisions are to become independent and independent and will each have their own corporate structures along the new organizational structure from the beginning of 2024. In addition, the corporate headquarters will be leaner and functions and responsibilities will be shifted to the business areas.
The plans would see all pharmaceutical activities from Brenntag Essentials transferred to Brenntag Specialties, while certain specialty products from the Specialties segments would 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 specialty business.
The investor Primestone had repeatedly called for Brenntag to be divided into the mass business with standard chemicals and the specialty area. Primestone expects this to result in higher profit margins and an increase in the share price. According to a presentation from June, Primestone held 2.1 percent of the DAX company at the time. According to the company, the two largest individual shareholders are Kühne Holding and the investment company Blackrock.
The board also confirmed its previous financial targets. He also announced that he expected annual gross profit growth of four to seven percent and an increase in operating profit (Ebita) of seven to nine percent.