From Breakingviews - Brenntag M&A gambit may prompt its own breakup
. A deal, the hedge fund reckons, would result in customers cutting business with the larger group and a lengthy antitrust battle, destroying any cost-cutting benefits.
Brenntag’s other shareholders hardly seem enamoured of the deal: its shares lost some 10% on the day it was announced. Chief Executive Christian Kohlpaintner can still withdraw without too much shame, as no price has yet been agreed. The problem is that PrimeStone’s other idea, a breakup of Brenntag, also looks viable.
Brenntag meshes together the humdrum business of transporting chemicals with one that serves customers in more specialised sectors like pharmaceuticals and nutrition. Companies in the latter sector tend to grow more quickly and be richly valued. Assume Brenntag Specialties throws off 770 million euros of earnings before interest, tax and amortisation this year, in line with its share of last year’s profit. Place that on the same 15.
, and it could be worth some 12 billion euros – more than matching Brenntag’s overall enterprise value. Kohlpaintner may prove a catalyst for dealmaking; just not the kind he intended. Satellites can fly higher in private
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