2023-07-06 07:30:39
In the midst of the orientation phase about the future structure of the group, Brenntag is reorganizing the management. With a realignment of the board announced on Thursday, the world’s largest chemicals trader is upgrading the top managers of the two corporate divisions and is also shifting operational management functions to the two divisions. The Executive Board will be reduced from five to four members.
The personnel decisions are likely to inspire the ongoing discussion about whether the Dax group should split up – into one dealer for basic chemicals and one for specialty chemicals. The company always affirms that it has been doing this thinking for a long time and of its own free will. But it has come under increased pressure from activist investor Primestone Capital, which is pushing to spin off the specialty chemicals business from the stronger basic materials division over underperformance.
Supported by other Brenntag shareholders, the capital market activist gave management an unusual reminder at the Annual General Meeting. Primestone almost succeeded in pushing through two of its own candidates for the supervisory board at the shareholders’ meeting in mid-June. Brenntag, on the other hand, only pushed through its two opposing candidates for the Supervisory Board with weak approval ratings of a good 60 percent.
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The company announced on Thursday morning that the heads of the two divisions Essentials (basic chemicals) and Specialties (special chemicals) will receive new titles on the Management Board: from August onwards they will each act as CEO (Chief Executive Officer), i.e. Chairman of the Management Board, instead of as Operational Manager (Chief Operating Officer, COO). With this new business card, Michael Friede remains the head of Specialties.
He only came from the Dutch Akzonobel in April and had previously worked at Covestro. In basic chemistry, Ewout van Jarwaarde, previously Chief Transformation Officer, will replace Steven Terwindt, whose contract will not be renewed, as head. Christian Kohlpaintner remains CEO, Kristin Neumann CFO. The post of head of transformation, which was only established in 2021, will be eliminated. Brenntag justifies this by saying that the conceptual work has been completed.
Experts see the restructuring as a harbinger of a split
The decisive innovations are still to come. On the one hand, the two business units will each have their own bodies (executive committees), similar to a board of directors, under the leadership of the CEOs. On the other hand, Brenntag is shifting certain functions from the group to the divisions, apparently functions such as human resources.
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The steps continue the decision made some time ago to set up the two units more independently. The background should be the different needs and order patterns of customers from bulk and specialty chemicals. Brenntag does not report the sales of its two units, but it is estimated that 60 percent of the 19.4 billion euros in sales in 2022 will come from basic chemicals and 40 percent from specialties. In addition, the Specialties business is now being divided up organizationally into a Life Science sub-unit, which supplies food, pharmaceutical and cosmetics suppliers, and another unit called Material Sciences for traditional chemical customers.
Many experts are likely to see the current steps as preparation for a split. In recent months, Kohlpaintner has always emphasized that this is one of several options to be examined. A holding structure, for example, would be different, as the manager explained to investors, as can be heard from these discussions. However, experience teaches that such processes develop their own dynamics and ultimately tend to lead to a split. At the annual general meeting in June, Kohlpaintner said that the company was not generally opposed to a possible split, but that it was too early at this point in time.
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