- Global market leader in chemical distribution is planning to list on Frankfurt stock exchange’s Prime Standard in the first half of 2010
- Issuing of new shares from capital increase of approx. EUR 500 million planned in addition to placement of old shares
- Chemical distribution market offers above-average growth opportunities through organic growth and acquisitions
- Deutsche Bank and Goldman Sachs acting as global coordinators and together with BofA Merrill Lynch and J.P. Morgan, as bookrunners
Mülheim an der Ruhr, February 25, 2010 – Brenntag, the global market leader in full-line chemical distribution, is preparing for an initial public offering. The company intends to be listed on the Prime Standard of the regulated market of the Frankfurt stock exchange already in the first half of 2010. Deutsche Bank and Goldman Sachs have been appointed as global coordinators. Alongside the global coordinators, BofA Merrill Lynch and J.P. Morgan are acting as additional bookrunners. Brenntag will use the expected proceeds of the IPO primarily to strengthen its equity capital base and expand its market presence in growth markets such as Asia, Latin America and Eastern Europe.
Brenntag is the global market leader in chemical distribution, providing more than 150,000 customers worldwide with distribution solutions for a wide range of industrial and specialty chemicals. Linking chemical producers and customers, Brenntag enables efficient management of the supply chain. The company purchases large quantities of industrial and speciality chemicals from its suppliers, provides short-term storage, often repackaging into smaller quantities, and provides one-stop access to a full-line of chemicals in less-than-truckload quantities to its customers. The product portfolio includes more than 10,000 chemicals as well as services such as just-in-time delivery, mixing and blending, formulation, repackaging, inventory management, drum return handling and technical services.
Resilient business model and flexible cost structure facilitate stable financial profile
Brenntag’s robust business model is based on complete geographic coverage and diversity across industries, customers, products and suppliers. This independence from individual products, industries or regions has enabled Brenntag to deliver an average EBITDA growth of 17 percent over the last five years. Even during the 2009 crisis, the company’s profitability remained stable. Brenntag reported sales of EUR 6.4 billion and an EBITDA of EUR 477 million for the 2009 fiscal year. While EBITDA remained virtually constant (2008: EUR 481 million), the decline in sales of 14 percent (2008: EUR 7.4 billion) can be attributed primarily to price reductions.
Brenntag benefits from outsourcing trend
Brenntag operates in a market with above-average growth opportunities. Between 2006 and 2008 the market for chemical distribution grew by an average of 10 percent per year to EUR 115 billion today, clearly outperforming chemical production (8.5%). One main driver is the trend towards outsourcing. As chemical producers are often unable to serve small and midsized customers in a cost-efficient manner, they frequently transfer these customers to chemical distributors. The same is true for chemical processing companies, who seek specialised distributors to perform increasingly complex functions formerly conducted in-house. Brenntag CEO Stephen Clark remains confident that this development will continue even more markedly in the wake of the economic crisis: “To save costs, chemical producers are increasingly passing small customers as well as orders on to distributors in order to continue focusing on their own core skills in research and development, production and the distribution of high quantities to bulk purchasers. As a market leader in chemical distribution with a global presence, we are well-positioned to benefit from this trend.”
Highly fragmented market offers attractive acquisition opportunities
At the same time, Brenntag aims to continue to grow by means of strategic acquisitions in what is generally a highly fragmented chemical distribution market. At the end of 2008, the five largest distributors worldwide had a combined market share of just less than 19 percent. This implies that the global market for chemical distribution by third parties, with a total volume of approximately EUR 115 billion, offers attractive growth opportunities through acquisitions. To this end, Brenntag can build on its own successful track record, having acquired 92 businesses since 1991 – 21 of those alone since 2007. The company expects to continue pursuing this strategy, with particular focus on the fast-growing markets Asia, Latin America and Eastern Europe and seeks to consistently enhance its global market leadership.
Expected proceeds strengthen equity capital base
Brenntag plans to place newly issued shares in addition to the placing of old shares. With the expected proceeds from this capital increase of approx. EUR 500 million, the company will strengthen its equity capital base.
Previously followed growth strategy will be continued
As in the past, Brenntag will continue to focus on achieving profitable growth both organically and through acquisitions. “As a global market leader with a strong regional presence, we are excellently positioned to actively move ahead as a leading industry consolidator. Listing our shares on the stock market is the logical next step in our growth strategy as it equips us with the means to further build on our leading platform,” says CEO Stephen Clark.
Brenntag is the global market leader in full-line chemical distribution (based on most recent market data). Linking chemical manufacturers and chemical users, Brenntag provides business-to-business distribution solutions for industrial and specialty chemicals globally. With over 10,000 products and a vast supplier base, Brenntag offers one-stop shop solutions to more than 150,000 customers. The value-added services include just-in-time delivery, product mixing, formulation, repackaging, inventory management, drum return handling as well as technical services. Headquartered in Mülheim an der Ruhr, Germany, Brenntag operates a global network with more than 400 locations in over 60 countries. In 2009 the company realized global sales of EUR 6.4 billion (USD 8.9 billion) with more than 11,000 people.
This announcement does not contain or constitute an offer of, or the solicitation of an offer to buy or subscribe for, securities to any person in Australia, Canada, Japan, or the United States or in any jurisdiction to whom or in which such offer or solicitation is unlawful. The securities referred to herein may not be offered or sold in the United States absent registration under the U.S. Securities Act of 1933, as amended (the “Securities Act”) or another exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Subject to certain exceptions, the securities referred to herein may not be offered or sold in Australia, Canada or Japan or to, or for the account or benefit of, any national, resident or citizen of Australia, Canada or Japan. The offer and sale of the securities referred to herein has not been and will not be registered under the Securities Act or under the applicable securities laws of Australia, Canada or Japan. There will be no public offer of the securities in the United States.
Investors should make their investment decision regarding securities, which may be offered in the future, only on the basis of information in the prospectus, which will be available from the Brenntag.
This announcement is directed at and/or for distribution in the United Kingdom only to (i) persons who have professional experience in matters relating to investments falling within article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (ii) high net worth entities falling within article 49(2)(a) to (d) of the Order (all such persons are referred to herein as “relevant persons”). This announcement is directed only at relevant persons. Any person who is not a relevant person should not act or rely on this announcement or any of its contents. Any investment or investment activity to which this announcement relates is available only to relevant persons and will be engaged in only with relevant persons.
The contents of this announcement have been prepared by and are the sole responsibility of the Brenntag Management GmbH (the “Company”). The information contained in this announcement is for background purposes only and does not purport to be full or complete. No reliance may be placed for any purpose on the information contained in this announcement or its accuracy or completeness.
This announcement is not for publication or distribution, directly or indirectly, in or into the United States. The distribution of this announcement may be restricted by law in certain jurisdictions and persons into whose possession any document or other information referred to herein comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.
This announcement may include statements that are, or may be deemed to be, “forward-looking statements”. These forward-looking statements may be identified by the use of forward-looking terminology, including the terms “believes”, “estimates”, “plans”, “projects”, “anticipates”, “expects”, “intends”, “may”, “will” or “should” or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements reflect the Company’s current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Group’s business, results of operations, financial position, liquidity, prospects, growth, strategies and the asset management business. Forward-looking statements speak only as of the date they are made.
Each of the Company, Deutsche Bank, Goldman Sachs, BofA Merrill Lynch, J.P. Morgan (together the “Banks”) and their respective affiliates expressly disclaims any obligation or undertaking to update, review or revise any forward looking statement contained in this announcement whether as a result of new information, future developments or otherwise.
The Banks are acting exclusively for the Company and no-one else in connection with the offer. They will not regard any other person as their respective clients in relation to the offer and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients, nor for providing advice in relation to the offer, the contents of this announcement or any transaction, arrangement or other matter referred to herein.
None of the Banks or any of their respective directors, officers, employees, advisers or agents accepts any responsibility or liability whatsoever for/or makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from the announcement) or any other information relating to the Company, its subsidiaries or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of announcement or its contents or otherwise arising in connection therewith.