The chemical trader wants to reorganize its supervisory board.
(Photo: IMAGO/imagebroker)
Dusseldorf A conflict broke out between the shareholders over the election of the new supervisory board of the chemicals dealer Brenntag in June. One of the two largest shareholders of the Dax group opposes the attack by the activist investor Primestone Capital, who wants to punch through two rival candidates to those of the company.
The logistics group Kühne announced on Monday that it intends to elect the candidates proposed by Brenntag. “In our view, Brenntag’s shareholders, who are interested in the sustainable and successful further development of the company and the continuous increase in enterprise value, would be well advised to do the same,” said Karl Gernandt, Executive Chairman of Kühne.
The Hamburg holding company of entrepreneur Klaus-Michael Kühne holds a six percent stake in Brenntag. The activist investor Primestone Capital owns only two percent of the shares, but advertises for support from other funds. The British have had support from influential quarters since Friday.
Voting rights advisor ISS supports the opposing candidates
The American voting rights advisor ISS has also spoken out against the election of the Brenntag candidates and recommends investors to vote for the two managers proposed by Primestone. Many Anglo-Saxon funds base their votes at general meetings on the recommendations of major advisors such as ISS.
The recommendations of ISS have already had a drastic effect in the past – for example with the vote of no confidence in Bayer CEO Werner Baumann at the Annual General Meeting 2019. The second major American voting rights advisor, Glass Lewis, has not yet made a recommendation for the Brenntag Annual General Meeting (AGM).
A nail-biter at the Annual General Meeting on June 16 is already becoming apparent for Brenntag. The suggestion of the company provides for the re-election of Richard Ridinger, who is then also supposed to take over the chairmanship of the supervisory board. The previous chief inspector Doreen Nowotne is retiring from the post. Suja Chandrasekaran is to be newly elected to the Supervisory Board.
Primestone spoke out against the appointment of Ridinger and Chandrasekaran and put up two opposing candidates with Geoff Wild and Joanna Dziubak. Wild used to run the German specialty chemicals and equipment company Atotec, and Dziubak is a former employee of the US investment bank Goldman Sachs.
Brenntag: Primestone Capital calls for demerger
If his two candidates entered the supervisory body, the activist investor’s demands for a change in strategy at Brenntag would suddenly gain more weight. Primestone is calling for the chemicals trader to be split into two separate companies: one for bulk business and one for specialty chemicals trading. In the report that has now been published, ISS also argues that the company’s dual structure does not bring any advantages.
Brenntag rejects this and wants to further develop both divisions under one roof. The Essen-based group calls on the shareholders not to follow the rejection of ISS. According to a statement by Brenntag, the former Lonza boss Ridinger has a lot of experience in the entire chemical industry, which the opposing candidate Wild cannot show.
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The election of the Primestone candidates would also mean that the supervisory board could not really act independently in the interests of all shareholders, Brenntag argued. In addition to the Kühne Holding, the group also receives support from the German Protection Association for Securities Ownership (DSW), which represents thousands of small shareholders.
Annual General Meeting: Showdown on June 16th
Its chief executive Marc Tüngler has rejected Primestone’s demands for a split from Brenntag and does not support the election of its candidate for the supervisory board.
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It is unclear how other important shareholders position themselves on this issue. The largest shareholder alongside Kühne is the asset manager Blackrock, followed by the US investor Capital Group and the German asset manager Flossbach von Storch.
On June 16th there could be a showdown at the general meeting. Should the activist investor prevail, this should also stir up the management around CEO Christian Kohlpaintner. Kühne boss Gernandt wants to prevent this: “We are convinced that the combination of Christian Kohlpaintner as CEO and Richard Ridinger as chairman of the supervisory board is particularly decisive for the sustained successful further development of the company.”
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