Activist investors are continuing to pile pressure on Brenntag. Both Engine Capital and PrimeStone Capital have openly rejected Brenntag’s proposed two new supervisory board members – Richard Ridinger and Sujatha Chandrasekaran – who are up for election at Brenntag’s annual meeting on Jun. 15.

Engine has recently stated that it will support the two candidates that PrimeStone has proposed, namely Joanna Dziubak and Geoff Wild. The two investors – Engine owns about 1% of Brenntag and PrimeStone about 2% – have been urging Brenntag since late last year to split into two and hive off its Specialties division.

“In an effort to facilitate a resolution of the election contest that would benefit all stakeholders, Engine recently took the step of proposing that the supervisory board expand to eight members to make room for PrimeStone’s highly qualified director candidates,” said Engine managing partner Arnaud Ajdler. “Unfortunately, Brenntag remains unwilling to engage and seems intent on extending a costly and unnecessary election contest to maintain the status quo instead of welcoming shareholder-designated directors to the boardroom.

Brenntag has not officially responded to Engine’s statement. But it did respond to a recommendation published by proxy advisory services company Glass Lewis on May 31 that shareholders vote against Brenntag’s two candidates.

The German multinational distributor said it “respectfully but strongly disagrees with this assessment by Glass Lewis”, recommending that shareholders vote for its own candidates. It added: “Brenntag believes that its track record, the objective of its current strategy and the strengths and competencies of the proposed supervisory board candidates have been significantly mis-stated.”

Ridinger, who was CEO of Lonza from 2012 to 2019, is a highly successful industrialist with a track record of decisive management, said Brenntag, while Chandrasekaran, would bring in “necessary competences” to oversee its transformation journey.

Brenntag added that PrimeStone’s candidate would not be independent, given that he has served as CEO of AZ Electronic Materials where Franck Falezan, now PrimeStone’s managing partner, was on the board as well as in a leadership role at with AZ owner Carlyle.

The distributor noted too that the competencies that Dziubak would bring were already well represented among the board’s current members.

Responding to calls for a split, Brenntag confirmed that its objective is to set up both its divisions – Essentials and Specialties – as two distinct businesses, but that Specialties “is not yet in a position to be run as a stand-alone organization”.

The group commented: “We believe a premature decision to break up Brenntag (as argued for by PrimeStone and Engine Capital) would seriously jeopardise the group’s ambitious transformation journey. Such ill-prepared separation would not “revive Brenntag” but poses the risk of creating two dysfunctional entities, to the detriment of all our shareholders and stakeholders.”

Author: Elaine Burridge, Freelance Journalist