Thursday, April 14, 2011

Commodities: Will Glencore Buy Louis Dreyfus Before it Goes After Xstrata? (XTA.L)

From the WSJ Europe's The Source blog:
When Robert Louis-Dreyfus took control of his great-grandfather’s commodities trading company in 2007, he set in motion a series of events that made a future merger or listing more or less inevitable.
A number of names have been bandied around as potential tie-ups for the firm, an elite agricultural commodities processor and marketer, but perhaps the one that makes most sense is a deal with its industry peer Glencore International PLC.

Robert Louis-Dreyfus died in 2009 and left the firm to his widow, holding company president Margarita Louis-Dreyfus. But a couple of years previously he placed the controlling shares of the Louis Dreyfus Group in a trust established for 99 years, with around 20% of its shares owned by employees.

In doing so, he consolidated a number of minority family shareholdings, which company staff say is conditional on the provision of a future liquidity event. This has now put serious pressure on Louis Dreyfus to IPO, merge or find a private investor.

Enter Glencore.
The Baar, a Swiss-based firm, which earlier Thursday announced its intention to float in London and Hong Kong, has already had discussions with Louis Dreyfus about a tie-up, people at the two companies say.
Ivan Glasenberg, Glencore’s chief executive, has publicly said that Louis Dreyfus would be a good fit, while Margarita Louis-Dreyfus said recently that “all options are possible”.

Industry executives are inclined to agree. A merger between the pair would create an unbelievably large behemoth across effectively every commodity sector, providing the holy grail of diversification for both sides....MORE
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