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Brenntag sees off ‘activist’ candidates

At their AGM on 15 June, Brenntag shareholders voted for the company’s supervisory board candidates and rejected alternatives from ‘activist’ investor PrimeStone Capital, which has been agitating for a radical change in strategy. All of the motions proposed by the board were also approved, including a €2/share divided payout.

Richard Ridinger was re-elected as a member of the supervisory board with 62.71% of the votes cast, while Sujatha Chandrasekaran was newly elected with 61.79%. At its constituent meeting following the AGM, the supervisory board elected Ridinger as chairman.

PrimeStone, which has a 2% stake in Brenntag, has called for the company to separate the Essentials and Specialties businesses as a way to unlock greater shareholder value, on the basis that the company has underperformed compared to its peers. However, the shares are 20% up this year to €72, which may have dampened enthusiasm for change.

CEO Christian Kohlpaintner strongly opposed a separation, saying that the time was not right for such a move, Specialties having been impacted by high costs and falling demand in Q1 2023. “In the short term, our focus is on ... closing the performance gap at Brenntag Specialties and to drive forward the operational structure in both divisions towards greater independence,” he said.

After the vote, PrimeStone published a letter to shareholders, pointing out that Brenntag’s nominees received “the lowest level of support of any DAX company in the recent past” – at 38% against an average of 3%. It also noted that ISS and Glass Lewis, the two largest governance institutions in the world, endorsed its stands. All this, PrimeStone said, “reveals a deep frustration among Brenntag's shareholders” and a demand for:

1. Improved overall governance with a more open supervisory board

2. An “accelerated pace of improvement” at Brenntag Specialties

3. A “serious fact-based consideration of the separation of Essentials and Specialties with a heightened sense of urgency”

“We hope the Supervisory Board has heard this message from shareholders and understands that the status quo is untenable,” PrimeStone concluded, adding that it looks forward to Brenntag’s announcements on “concrete decisions for the operating model of both divisions” before the summer break.

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