Global commodity trader Louis Dreyfus Company has agreed to sell its fertiliser business to Canada’s Agrium Inc. as it continues an overhaul in response to tough agricultural markets.
Louis Dreyfus is to sell Macrofertil Australia Pty Ltd, which has annual sales of around $120-million, to Agrium’s Australian unit Landmark Operations Ltd in a deal expected to close in the first quarter of 2018, the companies said on Tuesday.
Financial terms were not disclosed.
Global merchants such as Louis Dreyfus have seen their margins eroded by large crop inventories, low prices and limited volatility, triggering cost-cutting and divestment moves.
The group has said it would seek partners for its fertiliser, metals, juice and dairy activities to focus more on core activities such as grains and oilseeds.
The group earlier this year agreed to sell its African fertiliser distribution business to Helios Investment Partners, and has hired banks to sell a stake in its metals unit.
“This transaction is another step towards the implementation of our strategic roadmap, enabling us to concentrate on businesses with closer ties to product sourcing and strong farmer relationships,” Gonzalo Ramirez Martiarena, Louis Dreyfus’ chief executive, said in a statement.
Louis Dreyfus will retain a fertiliser business in South America following the sale of the African and Australian activities.
Macrofertil Australia, whose network includes six fertiliser storage and distribution assets, has annual volumes of over 300,000 tonnes.
Agrium said in a separate statement the acquisition would complement its existing network of around 400 sites in Australia.
The deal comes as Agrium is preparing to merge by the end of the year with Potash Corp of Saskatchewan to form Nutrien, a transaction valued at $25-billion.
The downturn in crop markets has encouraged a wave of consolidation among firms that supply crop chemicals and seeds to farmers.
Courtesy: The Globe And Mail