The billionaire who controls Louis Dreyfus Commodities BV is considering selling a minority stake in the trading house to external investors as she weighs options for financing the buyout of remaining family shareholders.
Margarita Louis-Dreyfus’s family trust, which owns 81 percent of the firm’s holding company, said Wednesday in a statement that the firm is open to “a potential minority partnership with external investors." The trust was “fully prepared to further increase its stake" in the holding company as other family shareholders sell down, it said.
Louis-Dreyfus is seeking to raise cash after other family members signaled their intention to tender shares, according to people familiar with the company, who asked not to be identified because the matter is private. She is obliged to buy the shares under a long-standing agreement.
The potential sale would add to an acceleration in mergers and acquisitions in the agriculture commodities trading industry, including Mitsubishi Corp.’s purchase of a 20 percent stake in Olam International Ltd. for about $1 billion in August. Glencore Plc is trying to to sell a minority stake in its grain-trading business.
The 53-year-old, worth $4.4 billion, according to Bloomberg estimates, has bought out relatives in the past using funds raised by selling assets and taking on debt through a family trust called Akira BV. Set up on behalf of Louis-Dreyfus and her three children, Akira has loans with Credit Suisse Group AG totaling $575 million, of which $475 million was added in June, according to company filings in the Netherlands.
Russian-born Louis-Dreyfus has lifted her stake in the company that controls the business to 81 percent from 50 percent in 2008, according to company filings. She’s been the dominant shareholder since the death of her husband Robert in 2009.
Bringing in external investors “could present new business development opportunities” for the trading house, she said in Wednesday’s statement.
Louis Dreyfus Commodities has said it controls about 10 percent of global agricultural commodity shipments. It handles raw materials ranging from cotton to grains to orange juice and forms part of the top league of industry traders collectively known as the "ABCD". The nickname comes from the initials of the companies Archer-Daniels-Midland Co., Bunge Ltd., Cargill Inc. and Dreyfus itself.
The search for cash follows an agreement that allows family other than Margarita Louis-Dreyfus to tender as much as 20 percent of the holding group shares each year until 2031, first revealed in company filings in 2008. The purchase price is the “higher of the equity as per latest available consolidated financial statement of Louis Dreyfus Holding Group BV and the fair market value,” according to a company filing.
Louis Dreyfus Holding BV owns about 90 percent of the trading house, with the rest held by employees of Louis Dreyfus Commodities, according to its website. The holding company had an equity value of $6.2 billion in 2014.
One of the possibilities under consideration is selling a minority stake to a sovereign wealth fund, the same people said. In the past, she’s held talks with Singapore’s Temasek Holdings Pte. Temasek declined to comment.
Louis-Dreyfus could be considering other ways to raise cash. In the past, Louis-Dreyfus has raised money through selling shares in Biosev SA, the Brazilian sugar and ethanol producer controlled by the holding group, but the company has struggled with a weak sugar market and its shares have declined about 31 percent this year.
The trading company, founded in 1851 by grain trader Leopold Louis-Dreyfus, is weathering a slump affecting the wider agriculture sector. The company, which has trading operations in Geneva, Singapore and the U.S., said Sept. 29 that first-half profit dropped 50 percent.
The firm named Gonzalo Ramirez chief executive officer in September, while Louis-Dreyfus took over as non-executive chairman. The company had been searching for a permanent CEO since April 2014.