Updated — Commodities and agrifood giant Louis Dreyfus Co. is stepping out of the grain handling business it built in Canada with a deal to sell its Prairie elevator network.
Louis Dreyfus (LDC) announced Wednesday it has an agreement in place to sell its 10 elevators across Western Canada to Winnipeg grain company Parrish and Heimbecker.
The two privately-held firms said the financial terms are to be kept confidential on this deal, which they expect to close in the fourth quarter of this year.
P+H said the deal will allow it to offer farmer customers “increased access to more competitive offerings in grain trading, handling and merchandising, as well as full-range crop input products backed by leading agronomic solutions.”
Rotterdam-based Dreyfus, the “D” in the “ABCD” group of global grain industry players, has been a direct player in the Prairie grain handling business since 1998, when it announced it would “enhance” its presence in Canada and build its own network of primary elevators.
Over the following five years, that network was built up to include the 10 elevators at Virden and Rathwell, Man., Aberdeen, Kegworth, Tisdale and Wilkie, Sask., Joffre, Lyalta, and Rycroft, Alta. and Dawson Creek, B.C. The elevators run between 21,340 and 53,040 tonnes in capacity.
The deal announced Wednesday, however, will not include LDC’s 10-year-old Yorkton, Sask. canola crushing and refining plant — one of North America’s largest, at a crush capacity of about 3,000 tonnes per day.
LDC will also keep its St. Lawrence River grains and oilseeds terminal, a 292,950-tonne capacity facility it set up in the 1960s at Port Cartier, Que., about 60 km southwest of Sept-Iles.
Growers who deliver to any of the 10 Dreyfus elevators will still be able to use the company’s MyLDC mobile app to manage their contracts with LDC until the deal closes, a Dreyfus spokesperson said. Beyond that date, growers who deliver directly to the Yorkton crush plant will still be able to use the app with no changes to its current offerings.
“P+H has built a great business, an excellent reputation, and their culture and long-term vision are a good fit for LDC employees and farmer customers — a key factor in evaluating the transaction,” Brant Randles, president of LDC’s Calgary-based Canadian arm, said in a separate release.
The two companies’ elevator networks have little direct overlap — both have elevators at Tisdale, and P+H has an elevator at Yorkton — although six other LDC sites are about an hour’s drive or less from at least one P+H elevator.
LDC noted the deal’s closing is still subject to “satisfaction of regulatory requirements and customary closing conditions.” A Dreyfus spokesperson confirmed via email that the deal is subject to approval from Canada’s Competition Bureau.
P+H CEO John Heimbecker, in that company’s release, described the deal as “a win-win for farmers seeking a more competitive grain and crop inputs offering as well as for the stakeholders within P+H and LDC who work to support them.
“Acquiring geographically strategic assets from a global leader like LDC makes us better and stronger by an order of magnitude.”
Randles, in LDC’s release, said the company “remain(s) committed to this important market, connecting Canadian growers with local and international food markets with a greater focus on value-added processing.”
Dreyfus, like its fellow majors, has recently been up against reduced profits from sourcing and shipping grains and oilseeds due to burdensome global commodity supplies and the ongoing trade war between the U.S. and China.
The company in May was reported to be considering offering equity stakes to outside investors for the first time in its history. — Glacier FarmMedia Network