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Univar + Brenntag back of the envelope

Eric J Bokota

Late last week it was reported that the global leader in chemical distribution Brenntag (BNR.GR) is considering an acquisition of the number two player Univar (UNVR). While I think BNR could pay $45 per share, fund the deal almost entirely in debt, and have the transaction be nicely accretive, I think a proposed deal will run into antitrust issues in the US as the combined entity would have 25%+ market share and trigger a close look from DOJ.

BNR + UNVR transaction analysis

Both companies benefitted from chemical inflation/strong demand in 2022 and are overearning (UNVR's 2023 EBITDA guide assumes a 9.5% YoY EBITDA decline; I assume BNR's EBITDA to decline 12% given greater European exposure).

As you can see, assuming BNR were willing to lever up to 4x ND/EBITDA (pf), I believe Brenntag could pay $45/sh for Univar and still have a nicely accretive (+23% EPS uplift) while accomplishing its objective of increasing its share of profit coming from the US.

However, I see challenges for such a transaction. As best I can tell a deal would put the combined market share greater than 25% in the US which would trigger a throrough antitrust review.

Disclaimer: this is just like my opinion man. Do your own work.