Margarita Louis-Dreyfus strengthens grip on food trader with 'supermajority'

Margarita Louis-Dreyfus is strengthening her grip on the holding company that controls Louis Dreyfus Commodities, one of the world's biggest traders of coffee, sugar and wheat.

The news came as privately owned Louis Dreyfus Commodities revealed flat annual profits for 2014, after falling agricultural commodity prices weighed on performance.

Ms Louis-Dreyfus said she expected the Rotterdam-based company - widely known as Dreyfus - to have completed a search for a chief executive by the end of the year.

The Louis-Dreyfus family has maintained control of the group since it was founded in 1851 by Leopold Louis-Dreyfus, the son of a farmer who started selling French wheat across the border in Switzerland.

Since the death of her husband Robert in 2009, Ms Louis-Dreyfus, a Russian, has been steadily increasing her grip on the company.

Under a deal expected to close in June a family trust called Akira will increase its stake in Louis Dreyfus Holdings from 65 to 80 per cent, by buying shares from other family members.

LDH owns 85 per cent of the shares, with the rest held by senior employees.

Ms Louis-Dreyfus, chair of LDH, refused to say how much she had paid for the stake which will give Akira a "supermajority" in the holding company's decision making. Once Akira's stake rises above 67 per cent, minority shareholders will have less power to block strategic moves.

"One of Akira's main goals to is keep family control of the company, and with 80 per cent we have complete control," said Ms Louis-Dreyfus, who is also the owner of Olympique de Marseille, a French football club. "Gaining a supermajority was important."

While there were no plans to acquire the remaining 20 per cent of the shares, she said Akira would be willing to buy additional stock if more family members wanted to sell.

Under an agreement hammered out by her late husband, Akira has the obligation to buy shares that other family members tender during the period from "2011 until 2031".

"We'd like to keep our options open . . . Akira could buy or we could bring in a strategic partner. It depends on the situation," she added. "Minority shareholders will decide."

Dreyfus resumed its search for a chief executive late last year when its chosen candidate, Mayo Schmidt - former head of Viterra, the Canadian grain trader - decided not to take the job after failing to agree terms.

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Ms Louis-Dreyfus said she had learnt from the experience and was still open to the idea of appointing an outsider. "I don't have a preference where to look. We are going to look everywhere," she said.

In the year to December, Dreyfus reported net income of $648m, compared to $640m in 2013, as a strong performance by the food-processing business offset weak results by its trading arm. Sales rose 2 per cent to $64.7bn.

The group paid $600m in dividends to shareholders, including Ms Louis-Dreyfus. Half of the total was a one-off payment funded by asset sales.

The group's 'Value Chain' division, which is focused around oilseeds, grains, and fruit juice, posted a 19 per cent rise in operating profits, as abundant supplies of crops helped Dreyfus run assets such as processing plants at higher rates of capacity.

Dreyfus' trading, or 'Merchandizing' arm, did less well. Operating profits at the division, which buys and sells commodities including cotton, sugar, coffee and rice, fell 13 per cent last year because of weaker prices and high inventories.

Against a backdrop of falling agricultural commodity prices, Ms Louis-Dreyfus said she was pleased with the results, which proved the strength of the group's business model.

"We remain one of the best performers in our industry with a return on equity of 14 per cent. This is a good achievement in a challenging environment," she said.

Under Ms Louis-Dreyfus the group has altered its operations so they are more closely aligned with those of a listed company. However, Dreyfus has no plans to follow Glencore and go public.

Dreyfus and its rivals ADM, Bunge and Cargill - collectively know as the "ABCD" group - dominate global flows of food commodities.

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