UPDATE 1-Commodity group Louis Dreyfus completes stake sale to ADQ
(Adds CEO comment, company background, details)
PARIS, Sept 10 (Reuters) – Louis Dreyfus Company (LDC) said on Friday it had completed the sale of a 45% indirect stake to Abu Dhabi holding firm ADQ, marking the arrival of the first non-family shareholder in the agricultural commodity group’s 170-year history.
The overall value of the deal was not disclosed but LDC said in a statement that a portion of the proceeds had been invested in the full repayment of a $1.051 billion loan that LDC had granted to its parent company.
The stake sale to ADQ was initially announced last November.
That ended a long hunt for an investor by controlling shareholder and chairwoman Margarita Louis-Dreyfus, who had built up debt buying out other family members during a period of lean profits for the commodity merchant.
LDC, known as Dreyfus, is the “D” of the “ABCD” quartet of renowned global agricultural commodity firms alongside Archer- Daniels-Midland Co, Bunge Ltd and Cargill Inc .
“This partnership with ADQ reinforces LDC’s position and financial strength to accelerate strategic investments (…) including in new areas such as plant-based proteins, as well as in projects to move further downstream in several of our existing business lines,” Chief Executive Michael Gelchie said in the statement.
The financial pressure on LDC in recent years was also linked to Brazilian sugar firm Biosev, previously owned by LDC’s parent.
The $1 billion loan from LDC to its parent, originally due in 2023, was part of a bailout for Biosev.
That burden has also eased after LDC’s holding firm agreed this year to sell Biosev to Brazilian energy company Raizen .
A surge in commodity prices and strong grain demand from China have also boosted earnings for merchants during the coronavirus pandemic, helping LDC’s profit recover last year.
For state-owned ADQ, the investment in LDC extends a foray into food commodities that are crucial to import-reliant Gulf states.
The deal with LDC outlines a long-term supply agreement to sell agricultural commodities to the United Arab Emirates.
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