The two largest chemical distribution firms in the world may be on a path to becoming one company. While the proposed deal has plastics implications, that's a relatively minor factor.
Essen, Germany-based Brenntag SE on Nov. 25 confirmed it is in preliminary discussions to buy Univar Solutions Inc.
"These discussions are ongoing and there are no concrete results or agreements yet," it said.
Accordingly, Brenntag said that it was not foreseeable "whether there will be any kind of transaction."
In a separate statement, Downers Grove, Ill.-based Univar said it had received "a preliminary indication of interest" from Brenntag regarding a potential transaction.
Brenntag's shares fell nearly 11 percent on Nov. 28 after disclosing the talks. Bloomberg News first reported on the proposed deal on Nov. 25.
Joshua Spector, Americas chemicals analyst at UBS, in a research note said that Brenntag and Univar are No. 1 and No. 2 in the world in chemical distribution. But because distributors only handle around 10 percent of global chemical sales and the market is highly fragmented, a merger of Brenntag and Univar would represent only 8 percent of global chemical distribution sales. Spector was quoted in ICIS News.
Brenntag distributes a wide variety of chemicals, including some polymers and synthetic rubber materials. Its large portfolio includes thermoplastics and additives.
The company has a relatively small base in North America, although CEO Christian Kohlpain said earlier this month that the company wants to grow in North America and plans to double its annual spending on acquisitions to around 400 million to 500 million euros over the next four years.
Univar offers elastomer materials including silicone elastomers and silanes, plus antioxidants, plasticizers, accelerators, flame retardants and processing aids.
Univar briefly had a larger plastics portfolio in 2018, when it purchased Nexeo Solutions Inc. for $1.8 billion. But the company immediately sold Nexeo's plastics distribution business to One Rock Capital Partners LLC. That business has since been renamed Nexeo Plastics LLC and is based in The Woodlands, Texas.
European Rubber Journal contributed to this report.