Local SME Tee Hai Chem sells 51% stake to German MNC, teams up to go global

The firm hopes to accelerate growth by tapping Brenntag's global network to further expand its reach

Singapore

SPECIALITY chemicals distributor Tee Hai Chem on Thursday sold a 51 per cent stake to German chemical distribution giant Brenntag for a sum estimated to be S$200-300 million.

Following the transaction, the family behind Tee Hai Chem, which include executive director Han Koon Juan and his three siblings, will become minority shareholders.

Headquartered in Singapore and with a heritage of over 53 years, Tee Hai Chem specialises in the procurement, sales and distribution of materials and chemicals, and the provision of services to strategic industries in the region such as life sciences, electronics and research & diagnostics. Its revenue for FY2018 stood at S$170 million.

With the move, the Singapore company aims to accelerate growth by tapping Brenntag's global network to further expand its reach regionally and globally, as well as give Tee Hai's employees an opportunity to be part of a worldwide organisation.

Even as Brenntag acquires a majority stake, Mr Han, Tee Hai's second-generation leader and son of founder Han Chin Fong, said that there will be "no changes" to Tee Hai's management team. Brenntag will work with Tee Hai's management to jointly operate the company.

"We have built our business over five decades, and we look forward to growing even further with Brenntag as our partner," he said. "There is tremendous synergy between our businesses, as Brenntag echoes our forward-looking company vision and growth strategies."

The German firm is listed on the Frankfurt Stock Exchange, and has a global footprint of more than 580 locations in 73 countries. It generated sales of 12.6 billion euros (S$19.3 billion) in 2018.

On the rationale behind its acquisition, Henri Nejade, member of Brenntag's management board and CEO of Brenntag Asia-Pacific, said that the firm was "extremely impressed with the calibre" of Tee Hai's staff, as well as its supplier and customer relationships. He added: "The location of its facilities in Singapore offers strategic advantages in proximity to customers, major ports and neighbouring growth markets."

The transaction was advised by Evercore, the financial adviser to Tee Hai.

Keith Magnus, chairman of Evercore Asia, said that the firm worked with the Han family to find the right partner for their business through a "calibrated and involved process" to ensure that the family's objectives of better serving their customers and caring for their employees were met.

He added: "We are proud that Singapore continues to attract significant foreign investment which provides the opportunity for home-grown businesses to join forces with global industry giants and, at the same time, provide employees with opportunities for international mobility."

Tee Hai's clients include major pharmaceutical and semiconductor firms. It owns and operates the largest purpose-built standalone facility in Singapore and South-east Asia for the life sciences sector, as well as the largest facility for high-volume, fast-turnaround logistics operations in Singapore for the electronics sector.

Its partnership with Brenntag echoes an earlier deal in April 2018, when mechanical and electrical engineering solutions provider Wah Loon Engineering sold a majority stake to Vinci Energies Asia-Pacific, a subsidiary of Euronext Paris-listed infrastructure and construction giant Vinci SA, for an estimated sum of S$250 million.