Louis Dreyfus Sells African Fertilizer and Inputs Business

African-focused private equity firm Helios Investment Partners has agreed to fully acquire Fertilizers and Inputs Holding B.V. - the holding company of Louis Dreyfus’ African fertilizers and inputs business in a 50:50 debt and equity deal valued at approximately US$200 million, sources have told the Financial Times.

Founded in 1947 and acquired by Louis Dreyfus in 2011, Fertilizers and Inputs Holding distributes crop protection products, fertilizers, seeds, and chemicals throughout Angola, Burkina Faso, Cameroon, Ivory Coast, Madagascar, Mali, and Senegal, and leverages its well-known La Cigogne brand, generating US$300 million in sales per year.

“Our global fertilizers and inputs business has expanded its reach, sales volumes and customer base in recent years,” said Gonzalo Ramírez Martiarena, CEO of Louis Dreyfus. “This transaction is fully in line with our strategy of concentrating on businesses in which we enjoy closer ties to product origination and farmer relationships. It will also allow us to strengthen our focus on forging partnerships in other geographies outside Africa.”

As a member of the ABCD global commodity traders that include Archer Daniels Midland (ADM), Bunge, Cargill, and Louis Dreyfus, Louis Dreyfus is not alone in facing significant headwinds in recent years due to adverse market conditions, bumper crops, high global stockpiles, and low prices.

These conditions have led each of the top four traders to undertake strategic restructuring and reorganization through streamlining operations, seeking out joint ventures, or shifting focus along the value chain in search of greater margins. Amid these changes, Louis Dreyfus announced its intention last year to reduce its African fertilizer operations, and to seek out joint ventures for its fertilizer businesses in other markets, while honing in its focus on its core activities in grains and oilseeds, reports Reuters.

Likewise, Cargill announced a widespread restructuring of its operations and management in 2015, and ADM announced the scaling back of its European operations earlier this year. Meanwhile, only days before, Bunge announced that it will be reducing its total capex for 2018 from $750 million to $650 million, and will be initiating a global Competitiveness Program that is expected to deliver a reduction in overhead costs of about $250 million once it is fully executed.

For Helios, the deal plays into its geographic area of interest, and adds a company to its portfolio that taps into macro population and consumption trends currently occurring on the continent.

“This transaction is a perfect example of Helios’ strategy of investing in core sectors of the economy to build pan-African champions,” said Souleymane Ba, partner at Helios. “Agriculture, which employs nearly half of Africa’s labour force, is the most important contributor to Africa’s GDP; we are looking forward to using our experience in successfully growing other multi-country distribution platforms in this key sector, ultimately helping increase yields and incomes for African farmers.”