ESSEN (dpa-AFX) - Chemicals trader Brenntag no longer wants to buy U.S. rival Univar Solutions after public criticism from one of its shareholders. Brenntag had only confirmed at the end of November that it was interested in a takeover. The company "decided today not to continue these discussions," according to a one-sentence statement distributed Monday evening. Shareholder Primestone Capital had publicly opposed the plans a month after they became known. Investors reacted with relief, with Brenntag shares rising sharply at the top of the Dax on Tuesday.

The share gained more than five percent to 63.80 euros after the start of trading. A trader said that the cancelled plans removed the risk of a capital increase and that the share was also cheaper than those of industry rivals. Last year, the share price underperformed, falling by almost a quarter in 2022, while the German benchmark index itself lost a good twelve percent.

Primestone had called for the "immediate termination" of talks with Univar. At the time, the investment company held two percent of Brenntag shares. The Essen-based company had not commented directly on the demand, but had stressed that it attached "great importance to an open and constructive dialogue with all Brenntag shareholders" in implementing the plan to increase value for the shareholders.

In Primestone's view, Brenntag should rather focus on improving its core business instead of a "high-risk" acquisition. To this end, the investor also called for a split-up of the company. The shareholder also criticized the lack of shareholder approval required for a takeover. The risks and uncertainties were very high, as a careful review of a possible purchase had shown. For example, Primestone assumed that synergy losses would be more likely to result, which would cancel out any cost reductions. Also, antitrust proceedings would likely be lengthy and difficult.

For his part, Primestone made demands in the letter which, in the activist investor's view, would enable Brenntag to polish up its balance sheet and increase its own stock market valuation from less than 60 euros at the time to 150 to 170 euros per share in three years. To this end, Primestone also called for a share buyback program worth 2.5 billion euros.

After years of "disappointing performance", it was also time to leverage the potential of Brenntag's Specialties and Essentials businesses by splitting them into two separate listed companies, the statement had added. Brenntag did not comment on these demands either.

The takeover of Univar would have been a turning point for the Essen-based company, which was previously known for smaller acquisitions. At the time of publication of the plans, the market capitalization of the Americans was a good five billion US dollars - and thus only slightly less than half the valuation of Brenntag.

The company itself had been modest about acquisitions shortly before the plans were announced. A new growth plan up to 2026 had envisaged a significant improvement in operating results and more spending on acquisitions. However, only 400 to 500 million euros per year were planned, which would have meant twice as much as before.

Analysts had been predominantly positive about a possible deal. Chetan Udeshi of JPMorgan, for example, had described a takeover of Univar as strategically attractive. However, the resulting potential for Brenntag would ultimately depend on price and implementation. Laurence Alexander of Jefferies also considered a takeover to be logical. If this were to happen, the world's two largest chemical distributors would merge, with a combined market share of around eight percent.

Barclays analyst Alex Stewart, on the other hand, was skeptical. Strategically, a takeover of Univar would represent an about-face in the chemical distributor's priorities, which he sees as an unwanted distraction in an otherwise compelling investment story. From a financial perspective, a deal could make sense, the expert noted. However, the strategic logic behind it should be questioned./he/men/mis/jha/