Brenntag Strengthens African Presence

31.07.2019 -

Leading chemical distributor Brenntag has announced its intention to buy out partner South Africa’s AECI in their Crest Chemicals joint venture. The companies have operated the 50:50 jv since 2001.

The business, which generated sales of around €95 million in the financial year ending Dec. 31, 2018, distributes and resells chemicals to a broad range of local industries, including industrial, paint & coatings, food, mining and water.

The transaction remains subject to certain conditions but is expected to be finalized by the end of 2019.

“We expect to realize cost synergies and convert cross selling opportunities by combining Crest and Brenntag South Africa since both companies have complementary product lines,” said Anthony Gerace, Brenntag Group’s managing director mergers & acquisitions. “In addition, Brenntag will benefit from Crest’s mixing & blending capabilities, a service that is increasingly requested by customers.”

Meanwhile, following an agreement to buy Kenya’s Desbro Group last September, Brenntag has now taken over the businesses in Kenya and the United Arab Emirates and expects the purchase of operations in Tanzania and Uganda to complete “in the following weeks”.

Headquartered in Nairobi, Desbro offers a wide portfolio of commodities and specialty chemicals to a diverse range of industries in East Africa and the Middle East, including plastics, coatings & construction, textile, water treatment, and increasingly, life sciences.

Karsten Beckmann, member of Brenntag Group’s management board and CEO Brenntag Europe, Middle East and Africa, said Desbro provides the “needed market expertise, organization and infrastructure to build on our strategy to claim outstanding Africa coverage”.

In separate news, Brenntag has lowered its outlook for full-year 2019 financial results following a “noticeable slowdown in demand in June and a corresponding impact on earnings”. The German group expects the difficult environment to continue during the course of the year, although is still anticipating higher growth in the second half compared to the first.

On a comparable basis, Brenntag is now forecasting EBITDA to grow in the range of 0-4%, down from its previous prediction of 3-7%.

The company will publish its results for the second quarter of 2019 together with a full-year forecast on Aug. 7.