US-Based Univar Inc. plans to acquire Nexeo Solutions, Inc. to get a leading edge on the chemical industry value chain
Published Date | 2018 September 18
Univar Inc., US-based global chemical and ingredients distributor and provider of value-added services, plans to strengthen its market by acquiring Nexeo Solutions, Inc. at USD 2 Billion.United States: As a result of the above-mentioned deal, Univar Inc. will be able to increase its Canadian and US chemical sales force from around 660 sellers to approximately 960 sellers. However, this will exclude the sales force of Nexeo’s plastics distribution business. The deal will thus help Univar to get a leading edge on the distribution channel of chemicals and chemical ingredients, with wider customer base and varied product offerings. Thus, the collaboration will positively impact the entire value chain of chemical product industries. According to David Jukes, the CEO of Univar, the collaboration will “have a tremendous opportunity to grow in a highly fragmented marketplace”. Further he added that, “We will have a broader, more comprehensive, more compelling product offering for our customers, and more reach for our suppliers. We will have people able to prospect on more customers to sell high, wide and deep in the marketplace. We expect this to augment our growth plan. This is all about growth.” This clearly hinges to fact that the deal is fallout of a strategic move from company’s side to strengthen its position in the chemical industry ecosystem. The collaborative sales of the two US-based distributors on the basis of last 12 months are USD 12.5 Billion, wherein almost USD 2 Billion is in plastics distribution. As a result of the deal, Univar would remain the world’s 2nd largest distributor of chemical and chemical ingredients, preceded by Germany’s Brenntag, though with a wider customer base and diversified product offerings. According to the market insights of BlueWeave Consulting, Univar's strategic decision will provide them a strong strategic alignment across the business models, superior product offering, go-to-market strategies and digital capabilities. This collaboration is perceived in the chemical industry as a logical and compelling step forward. This represents their focus on accelerating growth for the benefit of employee, suppliers and above all the customers. The deal will align the best capabilities, resources and talent of both the companies, to deliver superior service and expanded value to the customers and supplier partners. Univar's leading e-commerce and digital capabilities will be leveraged by Nexeo in their centralized ERP platform and financial systems. Therefore, the acquisition will accelerate the digital transformation of Univar and minimize costs and will enhance the ease of doing business. Moreover, both the companies believe that together, they can drive growth and shareholder value by forming largest North American sales force in chemical and ingredients distribution. In addition to it, they will be capable to offer most efficient supply chain network and broadest product offering, in the chemical industry. Thus, the merger has the potential to have a positive impact in the entire value chain of chemical industry, given the formation of a strong distribution channel across the collaboration of two leading chemical and chemical ingredient distributors.