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Univar may be worth $40/share in takeout by Brenntag - analyst

Univar (NYSE:UNVR) may see ~$40/share in a potential takeover by Brenntag (OTCPK:BNTGF) after a report Friday that the companies were in talks, according to a Credit Suisse analyst. Univar rose 3.6%.

Brenntag could pay 9x+ 2023e valuation, which would imply ~$40/share for UNVR, Credit Suisse analyst John Roberts wrote in a note on Sunday. That would compare to Univar's own deal for Nexeo in 2018 when UNVR then paid 8.7x 2019e EBITDA.

The note comes after Brenntag confirmed a Bloomberg report on Friday that it's in talks to buy U.S. rival chemical distributor Univar. Brenntag said in a statement that the discussions are preliminary.

The deal may not see antitrust issues as the Univar (UNVR) acquisition of Nexeo, which involved a No. 1 buying a No. 3, didn't see competition problems, according to Roberts. He also highlighted that even though Brenntag and Univar are #1 and #2 in the U.S. and Europe, "there are many significant private competitors with significant shares in either local regions or in end market verticals."

Univar (UNVR) remains outperform rated at Credit Suisse wit the price target raised to $35 from $31, partly to account for the $40+ potential deal.

Univar CEO Christian Kohlpaintner told Reuters earlier this month that it was looking at the North American market with more interest as it plans to double annual spending in mergers and acquisitions.

Univar is scheduled to participate in a Credit Suisse Chicago Chemicals conference next Tuesday.