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PrimeStone wants Brenntag to scrap Univar merger

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Activist hedge fund PrimeStone Capital has written to chemicals group Brenntag urging the €9 billion German firm to scrap its proposed merger with US rival Univar Solutions, according to a report by Reuters.

PrimeStone, which holds a 2% stake in Brenntag, believes the deal will be subject to a lengthy anti-trust battle which would wipe out any cost-cutting benefits, and wants the company to consider a range of other options to improve shareholder value including a potential break-up of the business.

The company’s share price lost around 10% on the day news of the proposed merger broke, falling to around €58 having been worth €85 just over a year ago, despite negotiations being at a very early stage and no price having been agreed. 

Brenntag has two distinct business divisions – Brenntag Specialties (BSP) and Essentials (BES) – which PrimeStone wants to see split into two separate companies. Combined with a proposed €2.5 billion share buy-back programme, PrimeStone says in its letter that Brenntag shares “could be worth €150-170 in three years”.

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