ESSEN, Germany—The two largest chemical distribution firms in the world may be on a path to becoming one company.
Essen-based Brenntag S.E. on Nov. 25 confirmed it is in preliminary discussions to buy Univar Solutions Inc.
"These discussions are ongoing and there are no concrete results or agreements yet," it said.
Accordingly, Brenntag said that it was not foreseeable "whether there will be any kind of transaction."
In a separate statement, Downers Grove, Ill.-based Univar said it had received "a preliminary indication of interest" from Brenntag regarding a potential transaction.
Brenntag's shares fell nearly 11 percent on Nov. 28 after disclosing the talks. Bloomberg News first reported on the proposed deal on Nov. 25.
Joshua Spector, Americas chemicals analyst at UBS, in a research note said that Brenntag and Univar are No. 1 and No. 2 in the world in chemical distribution. But because distributors only handle around 10 percent of global chemical sales and the market is highly fragmented, a merger of Brenntag and Univar would represent only 8 percent of global chemical distribution sales. Spector was quoted in ICIS News.