November 7, 2017 / 5:18 PM / in a year

Anglo American considers bid for Louis Dreyfus metals unit: sources

MELBOURNE/LONDON (Reuters) - Mining giant Anglo American (AAL.L) is among several companies interested in buying commodity trader Louis Dreyfus’s [AKIRAU.UL] metals business, three trading and banking sources told Reuters.

The Anglo American logo is seen in Rusternburg October 5, 2015. Picture taken October 5, 2015. REUTERS/Siphiwe Sibeko/File Photo

Dreyfus started an official sale process for a stake in the business, which could be a majority shareholding, by hiring Citi and ING earlier this year to assist it. Its metals business had a book value of $314 million as of 2016, according to filings.

Chinese conglomerate HNA Holding Group Co (0521.HK) has also shown an interest in the business, one of the sources said, while another source said that Swiss steel trader Duferco was another possible bidder. [nL4N1LO4GB]

“A strategic partnership would allow our metals business to further accelerate its growth and reinforce its leading market position and strong relationships in the industry,” a Dreyfus spokesperson said, declining to comment on the sale process.

Anglo American also declined to comment.

HNA, which bid in September for Singaporean logistics provider CWT Ltd CWTD.SI, and Duferco were not immediately available to comment. Glencore (GLEN.L) is seen as a less likely bidder.

The world’s biggest mining companies including BHP Billiton (BHP.AX) (BLT.L), Rio Tinto (RIO.AX) (RIO.L) and Anglo American sharpened their marketing strategies to seek higher margins, after a deep commodity downturn in 2015 hit profitability.

For BHP and Anglo, the strategies include moving into commodities trading, although on a far smaller scale than Glencore, which began life as a pure trader and says income from this business helped it through the commodity slump. [nL8N1D54IM]

Louis Dreyfus is one of four companies that dominate global agricultural trading, along with Archer Daniels Midland Co (ADM.N), Bunge Ltd (BG.N) and Cargill Inc CARG.UL, which have been hit by high global supply and subdued prices for grains and other agricultural products.

Its struggling grain division saw a shakeup in personnel, with a group of senior European and Black Sea traders leaving the firm in August to launch a new business in Dreyfus’s home country Switzerland. [nL8N1MF5MY]

Ring-fencing and selling stakes in some of its smaller businesses, including fertilisers, metals, juice and dairy units, would allow Dreyfus to focus on what it sees as core business.

Dreyfus agreed to sell its African fertilizer business to private equity Helios Investment Partners in July. [nL5N1KF357]

Technically, the metals business, which deals in refined copper, lead and zinc is a separate legal entity already but it is still fully owned by Dreyfus.

Dreyfus started trading non-ferrous metals including copper, zinc and lead concentrates in 2006 and its metals unit has offices in Shanghai, Singapore, Connecticut, Geneva, Lima, Santiago, Puebla and Johannesburg. It also has warehousing and logistical operations in Peru, Mexico, Chile, Africa and Taiwan.

Reporting by Clara Denina, Barbara Lewis and Melanie Burton; Additional reporting Gus Trompiz in Paris and Toby Sterling in Amsterdam; Editing by Veronica Brown and Susan Fenton

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