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Dec 5 (Reuters) – German chemicals distributor Brenntag (BNRGn.DE) said on Tuesday it will reorganise its business into two independent divisions from 2024 as it faces pressure from activist investors to break up the company.
In the reshuffle, the specialities arm, a wholesale business for process chemicals, and the essentials business, which provides services to industries, such as nutrition and household products, will each have their own legal structure and leadership.
The group said ahead of its Capital Markets Day event on Tuesday that the structural changes would give the company more options and make Brenntag ready for the next strategic steps by 2026. It did not specify what those steps might be.
Brenntag’s management has faced increasing pressure for a break-up of its businesses and a spin-off of the specialities unit from activist investors who have argued the separation would boost the company’s shares.
Jefferies said in a note that any major changes, such as a full break-up, did not appear to be on the table before 2026, with the company’s focus on business mix changes and growth targets.
Brenntag is the latest in a series of old and famous German companies, such as Bayer (BAYGn.DE) and Thyssenkrupp (TKAG.DE), that have been targeted by activist investors to divest part of their business to improve profitability.
As part of the reshuffle, the company will transfer all pharmaceutical activities from the essentials arm to the specialities unit, while moving water treatment and finished lubricants businesses along with some semi-speciality products in the opposite direction.
As a result, the specialties arm will account for 30% of the group’s gross profits, while essentials will make up the rest.
Brenntag said it aimed to grow its organic earnings before interests, taxes and amortisation (EBITA) by 7% to 9% per year until 2027, with 5% to 7% growth in essentials and 7% to 9% growth in specialities.
Brenntag’s shares were down 1.2% at 0911 GMT
($1 = 0.9240 euros)
Reporting by Tristan Veyet and Matteo Allievi in Gdansk; editing by Milla Nissi and Sharon Singleton
Our Standards: The Thomson Reuters Trust Principles.
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