ROTTERDAM, NETHERLANDS — Louis Dreyfus Company (LDC), one of the world’s largest grain traders and processors of agricultural products, announced on Nov. 11 that it has agreed to sell a large stake in the company to Abu Dhabi-based holding company ADQ.
The main Louis Dreyfus Company Holdings BV (LDCH) business will sell a 45% equity stake in the LDC unit, the companies said.
It marks the first time in the private company’s 169-year history that it will operate with ownership outside the family.
“The transaction announced today constitutes a milestone in a decade-long strategy envisioned by the supervisory board, which started with the consolidation of LDC’s parent company’s shareholding,” said Margarita Louis-Dreyfus, chairperson of the supervisory board of LDCH. “We are delighted to welcome ADQ to our shareholder group as long-term partners and investors, with a common vision for LDC’s future, and experience that will bring further value to the business and support the Group’s ambitions.”
The transaction price was not disclosed but the companies said a minimum of $800 million will be invested into LDC.
ADQ’s broad portfolio of major enterprises spans multiple sectors, among them food and agriculture. As part of its strategy for the sector, the company seeks to generate financial returns and strengthen the economic cluster in the UAE.
“As one of the world’s leading agri-commodities and food companies, LDC represents a strategic investment opportunity for ADQ, in line with our long-term food and agriculture investment strategy,” said H.E. Mohamed Hassan Alsuwaidi, CEO of ADQ. “We share LDC’s vision for future growth of the business, and look forward to partnering with LDC’s existing shareholders and management team to capitalize on the sector’s emerging opportunities, by accelerating LDC’s transformative growth strategy to move toward greater value chain integration — from producers to consumers.”
The agreement with Louis Dreyfus also will see ADQ sell agricultural commodities to the United Arab Emirates, the companies said.
Michael Gelchie, CEO of LDC Group, said the company’s strategy is to “leverage global consumption trends through investments in new business opportunities, as the company embraces more of the agricultural value chain to become an increasingly integrated food, feed, fibers and ingredients company.”
“With a shared ambition for investment in innovations and technologies that can transform food and agricultural production, the investment potential created by the long-term partnership with ADQ brings additional strength to the pursuit of LDC’s strategic growth plans, building on the strong performance delivered in the first half of 2020,” he said.
LDC posted strong earnings results in the first half of 2020 as it navigated global challenges such as the coronavirus (COVID-19) pandemic, trade tensions and market uncertainty.
Overall, LDC net income during the six-month period ended June 30 was $126 million, up from $71 million in 2019. Sales were $16.3 billion, down slightly from $17.5 billion. LDC attributed the decrease in sales to lower-than-average prices of main commodities traded by the company and a 2.9% slip in volumes shipped.
Louis Dreyfus is one of the so-called “ABCD” quartet of the world’s leading commodity trading houses, along with US-based Archer Daniels Midland Co., Bunge Ltd and Cargill.