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Brenntag

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Brenntag SE
Company typePublic (Societas Europaea)
FWB: BNR
FWB: BNRA (ADR)
OTC Pink Current: BNTGF
OTC Pink Current: BNTGY (ADR)
DAX component (BNR)
ISINDE000A1DAHH0
US1071801013
IndustryDistribution
Founded1874; 150 years ago (1874)
FounderPhilipp Mühsam
Headquarters
Essen
,
Germany
Number of locations
600
Key people
Christian Kohlpaintner (CEO),
Richard Ridinger (Chairman of the Supervisory board)
ServicesChemical and ingredients distribution
Revenue19.4 billion EUR (2022)[1]
Number of employees
>17,500 (2022)[1]
Websitebrenntag.com

Brenntag SE is the holding company of Brenntag Group. The company was founded in 1874 in Berlin and specializes in the distribution of chemicals and ingredients. The company is headquartered in Essen, Germany and has operations in more than 600 locations in 72 countries.[1]

History

Founding

In 1874 Philipp Mühsam founded an egg wholesale business in Berlin which would later become Brenntag.[2] At that time, the company also distributed medicines. In 1912 Brenntag entered the chemicals distribution business.[3]

World War II and post-war period

During the Nazi regime, the Mühsam family immigrated to the USA to escape Aryanization. Due to this, they sold their company Brennstoff-Chemikalien und Transport AG to the entrepreneur Hugo Hermann Stinnes – son of Hugo Stinnes – in 1937.[4] One year later, he renamed the company to Brenntag and in 1943 moved the headquarters from Berlin to Mülheim an der Ruhr, where Stinnes AG was headquartered.[5]

In 1950, Brenntag expanded operations by adding inorganic and organic chemicals, solvents, plastics, resins and specialty chemicals to its product line. In the following years, Brenntag also distributed fuels (carburettor fuels, diesel fuel and heating oil) from Ruhrbau GmbH, which was also a Stinnes company.[6]

Expansion abroad and takeover

In 1969, Brenntag acquired its first company, Balder from Belgium and a year later business operations in the USA started. After this, the company accelerated growth worldwide, especially by selective acquisitions in key growth areas.[7]

In the 1980s, the company continued to expand in the USA through acquisitions of several distribution companies, among others, the American distribution companies Western Chemical (1980), Textile Chemical (1981) and Delta (1986). In 1989, Brenntag acquired Crown and PB&S Chemicals.[8]

In the 1990s, Brenntag expanded within Europe through acquisitions and joint ventures.[9] This included, among others, the Dutch company Holland Chemical International N.V. By acquiring Holland Chemical International – the fifth-largest chemicals distributor worldwide at the time – in 2000 Brenntag gained market shares in Scandinavia, Eastern Europe, and the USA, and became a market leader in Latin America.[10]

In 2003, Deutsche Bahn took over Stinnes AG, including Brenntag. Just one year later, US private equity firm Bain Capital acquired Stinnes. Until the end of 2003, Brenntag had been a stock corporation, before Bain Capital converted it into a limited liability company.[7] In 2006, Brenntag was acquired by BC Partners.[4]

IPO and acquisitions

Brenntag Headquarter "House of Elements" in Essen.

After the takeover by BC Partners, Brenntag continued to acquire companies worldwide, expanding its network and market shares. From 2007 until 2021 the group acquired up to 99 companies,[3] between 2007 and 2010 alone more than 24 companies. In most cases, these were small supplements to the existing business in markets in which Brenntag had been less present until then.[3][11]

Since 29 March 2010, Brenntag AG (WKN A1DAHH) is listed at the German Stock Exchange in the Prime Standard Segment, from 21 June 2010 until September 2021 as a member of the MDAX index.[12] As of 20 September 2021, the company is included in the DAX as part of an index reform and expansion from 30 to 40 companies.[4] In the meantime, Brenntag has returned to 100% free float ownership.[13]

Entry into Asian market and business expansion

Major acquisitions expanded operations in the Asia/Pacific region. In 2008, Brenntag took over the Indian company Rhodia in Mumbai, giving Brenntag the first distribution presence in the region.[14] In 2010, Brenntag further expanded its market presence in the region significantly by acquiring EAC Industrial Ingredients Ltd. in Bangkok.[9] In 2011, Brenntag established a joint venture with Zhong Yung International Chemical Ltd. in China and in 2016 the company acquired the distributor EPChem Group in Singapore.[15][16]

Due to capacity problems, in 2017, Brenntag moved its headquarters from Mülheim an der Ruhr, to the House of Elements in Essen-Rüttenscheid.[17] Further, in 2021, Brenntag was converted from a stock corporation (AG) into a Societas Europaea (SE).[18]

In 2021, further acquisitions took place, primarily of suppliers for food manufacturers.[11] A major acquisition in this regard was the takeover of JM Swank in the USA. With the purchase, Brenntag acquired a major food distributor in North America, extensively expanding its range of food ingredients.[19]

Business operation

In 2022, the Group generated revenues of 19.4 billion euros and employed more than 17,500 people. Brenntag has around 600 sites in 72 countries.[1]

Body of the company

Management Board[20]

  • Christian Kohlpaintner (CEO)
  • Kristin Neumann
  • Ewout van Jarwaarde
  • Michael Friede

Supervisory Board[21]

  • Richard Ridinger (Chairman)

Shareholder structure

According to the definition of Deutsche Börse, 100% of Brenntag shares are in free float. The shareholders subject to voting right notification are BlackRock (>5%), Capital Group Companies, Inc. (>5%), Ameriprise Financial, Inc. (>3%), Flossbach von Storch AG (>3%), Wellington Management Group (>3%), GIC Private Limited (>3%), Burgundy Asset Management (>3%), EuroPacific Growth Fund (>3%), Kühne Holding AG (>3%).[13]

Business operations

Business model

Brenntag buys large quantities of industrial and specialty chemicals from manufacturers, commissions them into required quantities to meet specific demand and sells them on to its customers. The company links chemical producers and the processing industry. Brenntag also handles the procurement, storage, and delivery of required basic materials for its customers as well as various processes such as mixing raw materials, packaging, or repackaging.[22][23] Part of Brenntag's business strategy is the acquisition, i.e., buying companies to strengthen its own market position and expand its portfolio.[2]

Products

Brenntag's main operations include food, pharmaceuticals, cosmetics, oil and gas, and water purification.[4] Brenntag's product catalog includes more than 10,000 items ranging from acids, bases, and solvents to substances for the food, cosmetics, feed and pharmaceutical industries. The company also develops and supplies flavorings for spirits and food products.[22][5] In addition, Brenntag operates around 80 application laboratories, where customer-specific services and products are developed.[23]

Business segments

Brenntag has been organized into two global businesses since 2021. Brenntag Essentials supplies process chemicals for broad application areas on a local level, while Brenntag Specialties concentrates on ingredients and services for selected focus industries such as pharmaceuticals and nutrition.[3]

Controversy

Criticism of Brenntag arose in 2017 and again in 2021 because it supplied chemicals to Syria. At issue is the supply of raw materials for painkillers by Brenntag's Swiss-based subsidiary to the Syrian company MPI. Suspicions persist that the substances are used to manufacture chemical weapons such as sarin for Syria's usage of chemical weapons. Brenntag repeatedly denied violating EU export restrictions.[4] Duisburg public prosecutor's office closed proceedings against Brenntag in August 2019.[24]

References

  1. ^ a b c d Riedl, Anton (6 September 2023): "Brenntag: Fünf Gründe, warum die Aktie ein Kauf ist". In: Wirtschaftswoche.
  2. ^ a b "Kauf dich groß – in den Dax" [Buy big – into the Dax]. Focus (in German). 19 November 2013. Retrieved 7 March 2023.
  3. ^ a b c d Lipka, Anna Lena (12 January 2021). "Brenntag – Die Chemie stimmt" [Brenntag – The chemistry is right]. Focus (in German). Retrieved 7 March 2023.
  4. ^ a b c d e Schneid, Heidi (5 October 2021). "Brenntag beliefert die ganze Welt mit Chemie" [Brenntag supplies the whole world with chemicals]. Die Presse (in German). Retrieved 7 March 2023.
  5. ^ a b Meßing, Frank (7 September 2021). "Vom Stinnes-Ableger in den Dax" [From the Stinnes spin-off to the Dax]. Westdeutsche Allgemeine Zeitung (in German). p. 8.
  6. ^ Reichelt, W.O. (10 April 1952). "Vom Zapfwirt zur Großtankstelle" [From petrol pump owner to large filling station]. Die Zeit (in German). Retrieved 7 March 2023.
  7. ^ a b Becker, Walter (26 February 2010). "Vom Eierhandel in die weite Welt" [From the egg trade to the wide world]. Börsen-Zeitung (in German). Retrieved 7 March 2023.
  8. ^ Stinnett, Chuck (31 October 2009). "Brenntag avoids cyclical swings". Courier & Press. Retrieved 7 March 2023.
  9. ^ a b Telgheder, Maike (31 May 2011). "Brenntag verstärkt sich mit Zukauf in Nordamerika" [Brenntag strengthens its position with acquisition in North America]. Handelsblatt (in German). Retrieved 7 March 2023.
  10. ^ "Brenntag Announces Offer to Acquire HCI". PCI Magazine. 20 October 2000. Retrieved 7 March 2023.
  11. ^ a b "Unterschätzter Branchenchampion" [Underestimated industry champion]. Focus (in German). 3 September 2022. Retrieved 7 March 2023.
  12. ^ Schwerdtfeger, Heike (21 June 2010). "Dax-Neuordnung: Teure Einkäufe für Indexfonds" [Dax rebalancing: Expensive purchases for index funds]. Wirtschaftswoche (in German). Retrieved 7 March 2023.
  13. ^ a b "Geschäftsbericht Brenntag SE 2022" [Annual Report Brenntag SE 2022] (PDF). Brenntag. 7 March 2023. Retrieved 6 September 2023.
  14. ^ "Rhodia ties up with Brenntag to sell specialty chemicals, engineering plastics in Asia-Pacific". domain-b.com. 1 October 2008. Retrieved 7 March 2023.
  15. ^ "Brenntag closes acquisition of first tranche of Zhong Yung (International) Chemical Ltd". Lumitos. 22 August 2011. Retrieved 7 March 2023.
  16. ^ "Brenntag to Acquire Singapore's EPChem". CHEManager. 2 November 2016. Retrieved 7 March 2023.
  17. ^ Schraa, Rolf (22 December 2015). "E.on zieht nach Essen: Wenn ein Energiekonzern mit 40.000 Kisten umzieht". Die Welt (in German). Retrieved 7 March 2023.
  18. ^ "Brenntag macht Doreen Nowotne zur Aufsichtsratschefin" [Brenntag makes Doreen Nowotne Chairman of the Supervisory Board]. Süddeutsche Zeitung (in German). 10 June 2020. Retrieved 7 March 2023.
  19. ^ Nunes, Keith (24 June 2021). "Brenntag to acquire JM Swank". Food Business News. Retrieved 7 March 2023.
  20. ^ "Vorstand" [Management Board]. Brenntag (in German). Retrieved 7 September 2023.
  21. ^ Bernd, Fröndhoff (15 June 2023). "Chemieindustrie: Aktivistischer Investor scheitert bei Brenntag – jetzt droht ein Rechtsstreit" [Chemical industry: Activist investor fails at Brenntag – now legal dispute looms]. Handelsblatt (in German). Retrieved 6 September 2023.
  22. ^ a b "Börse: Das sind die zehn neuen Dax-Unternehmen" [Stock market: These are the ten new Dax companies]. Frankfurter Allgemeine Zeitung (in German). 20 September 2021. ISSN 0174-4909. Retrieved 7 March 2023.
  23. ^ a b Astheimer, Sven (12 November 2022). "Christian Kohlpaintner: Feuerwehrmann für Chemiebrände" [Christian Kohlpaintner: Firefighter for chemical fires]. Frankfurter Allgemeine Zeitung (in German). ISSN 0174-4909. Retrieved 7 March 2023.
  24. ^ "Chemiekalienhändler: Ermittlungsverfahren gegen Brenntag wird eingestellt" [Chemicals trader: Investigation against Brenntag discontinued]. Handelsblatt (in German). 13 August 2019. Retrieved 8 March 2023.
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