(Bloomberg) -- An investor in Univar Solutions Inc. is calling for the chemical company to run a full sales process to maximize shareholder value after it confirmed preliminary takeover talks last week with German rival Brenntag SE. 

Engine Capital, which said it owns roughly a 1% stake in Univar, sent a letter to the company’s board Wednesday arguing the approach confirms its view that the stock is undervalued. While it commended Univar for its recently expanded share buyback program -- something Engine Capital suggested in another board letter in October -- it called for a full sales process now that the company is effectively in play.

“This strategic approach from a direct competitor confirms Engine’s view that Univar is undervalued in the public market and, in turn, a highly attractive acquisition target for qualified buyers,” Engine Capital Managing Partner Arnaud Ajdler and Partner Brad Favreau said in the letter, a copy of which was reviewed by Bloomberg. 

Engine Capital argued Univar could fetch $38 to $44 a share in a competitive auction. 

Univar fell 1.5% in trading Wednesday to $32.33 at 9:44 a.m. in New York, giving the company a market value of roughly $5.3 billion. Shares in Brenntag were little changed. 

“We value the view of our shareholders and we will continue to make decisions and take actions that we believe are in the best interests of the company and our shareholders,” Dwayne Roark, a spokesman for Univar, said in a statement.

A representatives for Brenntag didn’t return a request for comment. 

While Ajdler and Favreau acknowledged the industrial logic of the potential combination, they noted private equity players have been active in the sector, including through past ownership of both Univar and Brenntag. 

“We urge you to publicly announce a competitive and formal sales process that invites additional parties to bid for the company and ensures the board has all the information needed to make a value-maximizing decision that benefits all shareholders,” the pair said. 

On Friday, Brenntag and Univar confirmed a Bloomberg News report that they were early stage discussions about a possible tie-up. The move would create the world’s biggest chemical distributor and create a company with more than $30 billion in sales. Shares in Brenntag fell sharply on the news.

--With assistance from Aaron Kirchfeld.

(Updates with share price in fourth paragraph, company comment in fifth paragraph)

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