PARIS: Louis Dreyfus Company (LDC) has agreed to sell a large stake to Abu Dhabi-based holding company ADQ, marking the first external investment into the family-run commodity group, founded by Leopold Louis-Dreyfus in 1851.
LDC’s holding firm will sell an indirect 45% equity stake in LDC to ADQ, the companies said in a statement on Wednesday.
Along with Archer Daniels Midland Co, Bunge Ltd and Cargill, Louis Dreyfus belongs to the ABCD quartet of the world’s leading commodity trading houses.
It has been trying to emerge from a period of weak margins for buying and selling staple crops and, in common with its peers, has shifted towards more towards food processing to try to boost revenue.
The transaction price was not disclosed but the companies said a minimum of $800 million will be invested into LDC.
The deal, subject to regulatory approvals, also includes a long-term supply agreement to sell agricultural commodities to the United Arab Emirates, the companies said.
Margarita Louis-Dreyfus, who assumed control of the group in 2009 after the death of her husband Robert, had been seeking an investor after building up substantial debt to buy out minority family shareholders.
After she told Reuters in January she could sell a sizeable non-controlling stake, reports in September showed that LDC was in talks to sell a stake to ADQ.
ADQ, established in 2018, said the investment in LDC would add to its food and agriculture portfolio after it agreed this year to acquire 50% of agribusiness group Al Dahra Holdings.
In September, it announced the creation of Silal, a company to diversify food sources and increase the supply of locally-grown food.
ADQ will obtain board seats and other shareholder rights in relation to the size of its stake, LDC’s press service said by email, declining to give further details.
Rothschild & Co acted as the sole financial adviser to ADQ, the bank said separately.
Margarita Louis-Dreyfus borrowed around $1 billion from Credit Suisse to buy out nearly all family minorities in early 2019.
Her Akira family trust subsequently controlled more than 96% of LDC’s holding group. The holding in turn owns about 95% of LDC, with employees holding the remainder.
In its first-half results, LDC declared equity of $4.5 billion as of June 30, down from $4.8 billion on Dec. 31.
Interim profits rose, with LDC pointing, like other merchants, to improved trading margins linked to price volatility and strong Chinese demand.
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