(Reuters) - Merger talks between top flight commodity group Louis Dreyfus and smaller Singaporean rival Olam (OLAM.SI) have failed, reviving speculation about the strategy of Dreyfus, a top flight commodities firm.
"We parted amicably, and we will continue to pursue our independent futures," Olam chief executive Sunny Verghese said at a news conference on Monday.
Louis Dreyfus has been in a state of flux since chief executive Robert Louis-Dreyfus died in 2009. Talks with Olam were announced in September last year and Dreyfus has been reported to have held merger talks with other rivals, including Swiss-based Glencore International GLEN.UL.
Louis Dreyfus, whose commodities arm generates about $35 billion in annual revenue, dominates the flow of agricultural commodities worldwide together with rivals Archer Daniels Midland (ADM.N), Bunge (BG.N), and Cargill CARG.UL.
It is the world's largest cotton and rice trader and ranks in the top three in orange juice, wheat, corn and sugar.
Its talks with Olam, announced in September, could have resulted in a firm with combined revenues of over $43 billion had they been successful.
Last year, analysts reckoned Louis Dreyfus could be worth between $10 billion and $11 billion, more than twice Olam's current market capitalization of $5 billion.
Privately owned Louis Dreyfus was not available to comment.
Olam, whose main businesses include cashew nuts, almonds, palm oil, coffee and rice, reported a better-than-expected 8.5 percent fall in fiscal second-quarter net profit on Monday, as higher commodity prices and margins helped offset a decrease in one-off gains.
OPTIONS OPEN AT LOUIS DREYFUS
The end of talks with Olam removes one of the options envisaged by the French commodity firm after the death of its former CEO, Robert Louis-Dreyfus. He left his 59 percent majority stake to a special trust, and made a commitment that his heirs would buy out minority shareholders from 2012.
It is not clear how the company plans to finance such a move, but aside from the talks with Olam, recent reports have covered the possibility of tie-ups with Bunge or Glencore, or possibly a listing of its commodity trading arm LD Commodities.
Glencore is itself looking at a dual listing in London and Hong Kong as early as April.
Robert Louis-Dreyfus's widow, who is said to favor the scenario of a merger over a listing, is set to take over as chairman at the end of the month, French daily Les Echos reported on Monday.
"Louis Dreyfus is still interested in doing a deal with another company. Obviously it did not work out with Olam but the chances are that it will find one that fits," Geneva-based analyst James Dunsterville said.
Talks between Dreyfus and rivals underscore sector consolidation as global players expand across commodities to take advantage of booming demand driven by a rising world population and fast-growing emerging economies.
