Louis Dreyfus Company has agreed to sell its African fertilizer business to Helios Investment Partners, sealing the first of a series of divestments planned by Louis Dreyfus as it responds to a tough cycle for agricultural commodity traders.
Helios, a private equity firm, is to acquire 100 percent of Fertilizers and Inputs Holding B.V., a distributor of fertilizers, crop protection products, seeds and industrial chemicals in West Africa that has annual sales of around $300 million, Helios and Louis Dreyfus said in a statement on Monday.
Financial terms of the transaction, which is pending regulatory approval, were not disclosed.
Louis Dreyfus had said last year it was pursuing an outright sale for its African fertilizer activities, while looking for joint venture partners for its fertiliser businesses in other regions.
Fertilizer is one of the areas, along with metals, juice and dairy, in which Louis Dreyfus has decided to seek partners while it focuses more on core activities like grains and oilseeds.
Dreyfus is part of the so-called ‘ABCD’ quartet of trading giants alongside Archer Daniels Midland, Bunge and Cargill that dominate global flows of agricultural commodities.
The trading giants have seen their margins crimped by large crop inventories, low prices and limited volatility, triggering restructuring efforts.
An approach by diversified commodity group Glencore towards Bunge has also raised the prospect of larger-scale consolidation in agricultural commodity trading.
Louis Dreyfus reported a second year of falling core profits in 2016 but said it expected to its restructuring to help its results this year.
The exercising of a put option by minority family shareholders to sell nearly 17 percent of the group’s holding firm has also fuelled speculation that Russian-born Margarita Louis-Dreyfus will seek a new shareholder for the 166-year-old firm she controls. (Reporting by Gus Trompiz)