(Recasts with changed sourcing and adds background)
Feb 14 (Reuters) - Activist investor Engine Capital took
a 1% stake in Germany's Brenntag SE and urged the
chemicals distributor to spin off its specialties unit on
Tuesday, arguing that they would be more valuable as separate
entities.
New York-based Engine Capital made its demands in a letter
to Brenntag's management a month after the German company ended
talks with smaller U.S. rival Univar Solutions on a possible
takeover. Engine Capital is also a shareholder in Univar.
"Brenntag Specialties is not achieving its full potential...
management acknowledges this underperformance and has taken
initial steps to fix these issues, namely by beginning a
separation of certain aspects of Brenntag Specialties from
Brenntag Essentials," Engine Capital's Arnaud Ajdler and Brad
Favreau said in a letter, a copy of which was reviewed by
Reuters.
As a standalone entity, Brenntag Specialties can maximize
its potential and close the gap with its competitors, Engine
Capital pointed out, adding that the specialties unit will lose
market share the longer it delays the spin-off.
If Brenntag followed the recommendations, it would trade at
about 140 euros per share by the end of 2024 - about double its
current share price, the activist investor added.
Brenntag declined to comment to a Reuters query. Bloomberg
News first reported the move.
Engine Capital joins PrimeStone, another activist investor,
in calling for Brenntag to break up into two separate companies.
Further, Engine Capital sought a share buyback program and
to add a shareholder representative to Brenntag's supervisory
board.
(Reporting by Akanksha Khsuhi, Akriti Sharma and Urvi Dugar in
Bengaluru; Editing by Rashmi Aich and Dhanya Ann Thoppil)
