According to the Financial Times, Margarita Louis Dreyfus has apparently sought Credit Swiss as advisor for a possible sale or initial public offering.
The Financial Times, which mentioned sources close to the negotiating process, has indicated that these new options are the result of the multiple merging failures with the group’s competitors among which figure Olam, Glencore or even Bunge.
For all that is known though, people close to the widow of Robert Louis Dreyfus are rather talking about a partial sale of the trading group. The scenarios considered suggest the possible sale of 30% of the shares to an Asian or Middle Eastern sovereign wealth fund. 20% would be listed on an exchange and the remaining 50% would stay within the group of Margarita Louis Dreyfus. Inspired by the recent IPO of Glencore, the new boss seemingly wanted to her group’s shares at the highest price possible.
However, the current environment does not look favourable. Despite the fact that Glencore’s IPO, which took place during May 2011, was a resounding success, the share price of the leading commodity trader has dropped by more than 20% in five months. At the same time, global commodity prices have plunged during the third quarter of 2011. Oil has dropped by 13% in 3 months. Copper, cotton or even nickel have all fallen by more than 15%. On average, commodities have all declined by more than 8% over the latest quarter as revealed by the S&P GSCI. This is the most significant drop since the 2008 crisis.
Will the investors be present? The value of Glencore shares has stayed for only one day above their initial offer price. Institutional players (among which are the Singaporean fund GIC, the American funds Blackrock and Fidelity and the Swiss bank UBS) which had supported the operation by subscribing massively to the 7.5 billion dollar worth share offering and which had committed themselves to keep them for at least 6 months face the prospect of having to wait or accepting a strong discount if they once again solicited for a commodity trader’s IPO.
