September 13, 2021

By Lynda Kiernan-Stone, Global AgInvesting Media

It’s official. Louis Dreyfus Company (LDC) has completed the sale of a 45 percent stake in the closely held company to Abu Dhabi’s largest holding company ADQ, marking the first time LDC has opened itself up to a non-family stakeholder in its 170-year history. 

Financial details of the agreement were not disclosed, however, the LDC press office told Reuters in November 2020 when the deal was initially announced, that $800 million of the proceeds will be used to pay down a $1.051 billion loan (originally maturing in 2023) LDC took on to bail out Biosev, a Brazil-based sugar company that is a subsidiary of one of its holding companies, and to fund the acceleration of strategic investments. 

Formerly known as Abu Dhabi Development Holding Co., ADQ was established in 2018 and is one of the largest holding companies in the region with investments in more than 90 local and international companies.

As a strategic partner of Abu Dhabi’s government, ADQ has a commitment to drive the transformation of the UAE toward greater food security and a global competitive and knowledge-based economy.

Earlier this year ADQ secured financing of about $1 billion through a group of small banks, including First Abu Dhabi Bank, Emirates NBD, Intesa Sanpaolo, and Natixis, for the acquisition.

“Food and agriculture is an attractive, core sector for ADQ to generate financial returns and strengthen the economic cluster locally,” said H.E. Mohamed Hassan Alsuwaidi, CEO, ADQ, last November. “As one of the world’s leading agri-commodities and food companies, LDC represents a strategic investment opportunity for ADQ. With a diversified agri-commodity portfolio, significant scale and broad geographic footprint, LDC will further accelerate the progress we have already made this year in significantly expanding ADQ’s food and agriculture portfolio.”

For Margarita Louis-Dreyfus and LDC this deal will alleviate this financial pressure while also giving it an opening to supply Middle East demand, and for ADQ and Abu Dhabi, which imports approximately 90 percent of its food, the partnership will offer greater food security, as the transaction includes a long-term supply agreement with LDC for the sale of commodities to the UAE. 

“The transaction completed today represents the start of a new chapter for LDC, as we welcome ADQ into our shareholder group and initiate a new phase of growth for the company, guided by a shared vision for LDC’s future,” said Margarita Louis-Dreyfus, chairperson of the Supervisory Board.

Although under financial pressure in recent years due to Margarita Louis-Dreyfus incurring debt to buy-out other family members, and its struggling Brazilian sugar company Biosev (which LDC’s holding company agreed to divest this year), LDC has experienced a manner of recovery due to the pandemic.

Rising commodity prices and increased global grain demand, particularly out of China, resulted in LDC’s profits rebounding last year by 66 percent to $382 million, while operations earnings before interest, tax, depreciation and amortization (EBITDA) increased 58 percent to land in excess of $1.3 billion. 

LDC stated that it remains focused on transforming strategy into action, while also responsibly keeping key essential agricultural supply chains flowing and reliable. 

Michael Gelchie, CEO, LDC Group, commented: “This partnership with ADQ reinforces LDC’s position and financial strength to accelerate strategic investments as part of our growth plans and ambitions, 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.”

He continued, “I look forward to continuing to work alongside the Supervisory Board to advance our shared ambitions for investment in innovations and technologies that can transform food and agricultural production sustainably, building on LDC’s leading position in core merchandising activities and strong performance in 2020.”

– Lynda Kiernan-Stone is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Oilseed & Grain News. She can be reached at lkiernan-stone@globalaginvesting.com.