National Post (National Edition)
Louis-Dreyfus opens up for first time with Abu Dhabi deal
Agricultural trader sells 45% stake to fund
Billionaire Margarita Louis-Dreyfus agreed to sell a 45-per-cent stake in the eponymous agricultural trader to an Abu Dhabi sovereign wealth fund, opening the storied family business to outside ownership for the first time to secure desperately needed cash for its owner.
Louis-Dreyfus, who controls more than 96 per cent of the holding company that owns LDC, has been scrambling to raise funds after borrowing about US$1 billion to buy out other family members and pledging some of her shares in the family business as collateral.
The agreement with ADQ should reduce some pressure from lenders including Credit Suisse Group AG. Until now, Louis-Dreyfus has repaid her debts by taking hefty dividends from the trading house, often larger than the annual profits, which had resulted in a drop in its equity value.
The deal confirms talks first reported by Bloomberg in September. Financial terms were not disclosed but the companies said at least US$800 million of the proceeds from the sale would be invested into LDC. The money will go toward repaying a US$1.05-billion loan from LDC to its parent company, the trader said in response to questions. The company had a book value of US$4.5 billion as of June, after paying a US$302-million dividend, most of which went to Louis-Dreyfus.
For ADQ , formerly known as Abu Dhabi Development Holding Co., acquiring a minority stake in one of the four largest traders of grains, oilseeds and sugar will help boost food security for the United Arab Emirates at a time when governments around the world are accelerating efforts to ensure they can feed their citizens.
While the fund owns large businesses spanning key sectors of the oil-rich emirate's economy, including Abu Dhabi Securities Exchange and Abu Dhabi Airports, the Dreyfus deal will be its first major overseas investment. It has in the past year emerged as one of the most active sovereign deal-makers from the Gulf, strengthening Abu Dhabi's food, energy and logistics security through a flurry of transactions.
Set up in 2018, it ' s chaired by Sheikh Tahnoon Bin Zayed Al Nahyan, a member of Abu Dhabi's royal family, and was in talks with banks earlier this year to bankroll its acquisition spree, Bloomberg reported. Its assets are now estimated at around US$136 billion, according to the Sovereign Wealth Institute.
As part of the deal announced Wednesday, LDC has signed a long-term commercial supply pact for the sale of agri-commodities to the UAE.
It isn't the first time that a state-owned investment firm has acquired an interest in one of the world's largest agricultural commodities trading houses. Temasek Holdings Pte, a state-owned firm of Singapore, is the majority owner of Olam International, a coffee-to-cotton trader. In 2012, GIC Pte, the sovereign wealth fund of Singapore, bought a five-per-cent stake in Bunge Ltd., becoming its largest shareholder. It later sold its stake.
For LDC, the sale caps a decade-long string of unsuccessful negotiations with others. Louis-Dreyfus discussed merging her agricultural trading house with Glencore PLC in 2011 but the talks with chief executive Ivan Glasenberg, which went as far as Glencore performing due diligence on Louis-Dreyfus, failed as both sides couldn't agree on valuation.
Later, she tried a merger with Bunge, but the conversations never went beyond an early approach. Louis-Dreyfus also talked with Singaporean stateowned investment firms, at least twice approaching them to sell a stake, but in both occasions the buyer balked at the price.