Brenntag Soars After Ending Talks with Univar

By Geoffrey Smith

Brenntag’s stock experienced a significant increase on Tuesday following the announcement that the world’s largest chemical distributor had decided to end preliminary discussions regarding a merger with its smaller U.S. competitor, Univar.

By 04:00 ET (09:00 GMT), Brenntag shares in Frankfurt had surged by 5.5%, making it the top-performing stock on the exchange.

In November, Brenntag had revealed it was in initial talks with Univar about a potential merger. However, a brief statement released on Tuesday confirmed that the company would not pursue the discussions further. Following the announcement, Brenntag’s stock price dropped as much as 18% over the subsequent month, as investors expressed concerns over the financial implications of a merger and the increasing fears of economic downturns in China due to rising COVID-19 cases.

Despite this, Univar’s stock remains about 10% higher than it was prior to Brenntag’s merger discussion announcement in November, and it may face pressure when U.S. premarket trading begins later.

Overall, European stocks continued their upward momentum in early trading on Tuesday, buoyed by indications that the continent’s energy crisis may have moved past its most critical phase. Benchmark prices, a vital factor for the chemicals industry in which Brenntag operates, dropped to their lowest levels since the onset of the Ukraine conflict in February during the first trading session of 2023, further declining by 4.1% in early trading on Tuesday. Other German chemicals companies, such as Covestro and BASF, also saw increases of over 2%.