Germany’s Brenntag acquires Zhongbai to expand its Chinese food and nutrition business

CHINA – German Chemical and ingredients distribution company, Brenntag, has announced plans to acquire Chinese speciality ingredients supplier Zhongbai Xingye Food Technology (Beijing) Co.

Brenntag aims to expand its food and nutrition business in China through the acquisition and has described the move as an “important step for our company to become a full-line distributor of food ingredients in the Asian market”.

“The chemical distribution market in Asia Pacific, and especially in China, is growing dynamically,”  said Christian Kohlpaintner, CEO of the Brenntag Group.

“We see a substantial potential there, and we will strengthen the focus on the region in terms of our M&A strategy. Thus, Zhongbai Xingye is perfectly in line with Brenntag’s ambitions, not only geographically, but also in terms of industry segment and deal size.”

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Under the terms of the deal, Brenntag will initially acquire a 67% stake at an enterprise value of around €90 million (about US$109.12 million).

The remaining 33% stake will be acquired by Brenntag before the end of 2021, according to a statement from the company.

Zhongbai Xingye distributes a wide range of speciality food ingredients, including dairy products and proteins.

The Chinese company generated sales of approximately €146 million (about US$ 177.02 million) over the 12-month period up to June 2020, according to Brenntag.

Commenting on the acquisition, Yaqi Liu, managing director of Zhongbai Xingye, said: “We are very pleased to become a part of the Brenntag family and to be such an important cornerstone in their expansion strategy.

“The food supplements industry has extraordinary potential worldwide and especially in China that we will leverage together.”

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Henri Nejade, member of the management board of Brenntag Group and COO Brenntag Specialties, added: “Headquartered in the capital of China, Zhongbai Xingye offers Brenntag the platform to extend our business of speciality food ingredients in the country.”

The acquisition of the initial majority stake in Zhongbai Xingye is expected to be completed in the first half of 2021 subject to contractual conditions and regulatory approvals.

It follows a the recent opening of a food ingredients facility in Padua, Italy by Brenntag Food & Nutrition which is a unit of the Brenntag Group.

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