In a two-step transaction, internationally active German chemical distributor Brenntag plans to acquire all of the shares in specialty chemical distributor Wellstar Enterprises (Hong Kong), along with its three Chinese subsidiaries, known jointly as the Wellstar Group. Financial terms have not been disclosed.

Brenntag said it will gain the majority stake of 51% in the Chinese company “over the course of the next few weeks” and take the remaining 49% by 2021. In the interim, the business will be operated as a joint venture.

Headquartered in Hong Kong and with subsidiaries in Shenzhen, Guangzhou and Shanghai, Wellstar Group distributes high performance pigments, effect pigments, resins and kaolin used in a broad variety of industries including coatings, inks, plastic and cosmetics. It also offers value-added services through an application lab for coatings.

In 2016, the company reported total sales of around €27.6 million, with most of its business in China.

Anthony Gerace, managing director Mergers & Acquisitions at Brenntag Group, said the distribution giant sees the joint venture as well positioned to grow on the back of favorable market trends, such as the growth in automotive industry in China.

Pointing to “synergy potential” with Brenntag China's existing customer base, Gerace said, the acquisition will allow it strengthen its relationship with a strategic key supplier. Henri Nejade, CEO Brenntag Asia Pacific, added that the purchase offers a chance to build up a specialty chemical division for industry segments such as coatings and personal care.