Louis-Dreyfus Widow Chairman Ousts Men Running Commodities Giant

When Margarita Louis-Dreyfus took her 13-year-old twins on a weeklong trip to Brazil for school break in October 2010, it wasn’t a beach-filled vacation.

She and the boys donned coveralls and hard hats. Then they toured the ports, plantations and juice factories of their namesake company, Louis Dreyfus Holding BV, in a crash course on the world’s biggest cotton and rice trader.

It was uncommon terrain for Margarita. A self-described indifferent student, she says she studied law at Moscow State University and thrived on that city’s culture while shuttling home to get an economics degree from the Leningrad Institute of Soviet Trade, Bloomberg Markets magazine reports in its March issue.

In 1988, on a flight to London from Zurich, she met Robert Louis-Dreyfus. A Frenchman with a Master of Business Administration from Harvard University, he’d go on to run companies on two continents before heading the commodities giant his great-grandfather founded in 1851. The two married in 1992. Margarita, who was working for a circuit-board-equipment seller, became a full-time wife and mother.

Robert was diagnosed with leukemia in 1997. As his battle against the disease intensified, he filled Margarita in on the business and created Akira Holding Foundation in 2008 to hold the 61 percent of Louis Dreyfus he’d go on to amass. He locked up the shares for 99 years and installed Margarita as family trustee, ensuring she couldn’t be voted off the board. When he died in July 2009 at 63, he left her in the strongest position on the three-person board, overseeing the largest stake in the world’s third-biggest agricultural commodities firm by revenue.

Margarita Louis-Dreyfus, chairman of Louis Dreyfus Holding, oversees a majority stake of the commodities giant bearing her late husband's family name. Photo credit: Jude Edginton/Bloomberg Markets via Bloomberg Close

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Margarita Louis-Dreyfus, chairman of Louis Dreyfus Holding, oversees a majority stake of the commodities giant bearing her late husband's family name. Photo credit: Jude Edginton/Bloomberg Markets via Bloomberg

Sickbed Wish

Since then, Margarita has immersed herself in Louis Dreyfus’s far-flung businesses. She says her goal is to fulfill Robert’s sickbed wish: to preserve the privately held, Amsterdam-based firm for his heirs.

“It was about protecting his children, his grandchildren, his great-grandchildren,” she says, wearing jeans and gray boots with her silver jacket open to reveal a blue-and-pink T- shirt with sequin-covered hearts. “It’s also protecting the company. What he was telling me every day were his dreams.”

Margarita, who will say only that she’s in her 40s, has embraced a daunting challenge: She’s a woman in a male-dominated business, who, with scant job experience, is seeking to steer a powerful family’s commodities conglomerate.

Not a Trader

“Generally, the boss needs to have been a trader,” says Philippe Chalmin, an economics professor at the University of Paris-Dauphine, who studies agricultural markets. He gives Margarita credit:

“She’s not like the image of the blond pinup wife,” he says. “You might have expected her to just live off the income from her rich husband’s estate, but that hasn’t been the case.”

Instead, Margarita is consolidating her power. In June 2010, Louis Dreyfus Chairman and Chief Executive Officer Jacques Veyrat and another Akira trustee, Erik Maris, resigned from the three-member board after Margarita accused them of conflicts of interest. She cited Veyrat’s stake in a Louis Dreyfus unit and Maris’s position as an investment banker for her claims. In March 2011, she took over as Louis Dreyfus chairman.

Veyrat left Louis Dreyfus in June 2011. He and Maris declined to comment for this story.

‘A Man’s World’

Margarita, seated in the Geneva airport office of the company’s commodities-trading operations, says Veyrat began thwarting Robert’s wishes soon after his death.

Veyrat pushed for a share listing, even though her late husband had told her not to consider one for at least a year after he died. Veyrat also started preliminary merger talks with Singapore-based rival Olam International Ltd. without telling her, she says. The two men even refused to let her bring a business adviser to an April 2010 Akira meeting, she says.

“It’s a man’s world, and most of the time, men don’t take women seriously,” she says.

Now, she’s in charge of one of the world’s four traditional agricultural giants, which are known by their initials: ABCD. Leopold Dreyfus, son of a Jewish farmer in French Alsace, founded the company in Basel, Switzerland, and named it for his father, Louis. With Archer Daniels Midland Co., Bunge Ltd. and Cargill Inc., Louis Dreyfus is among the top players in the global food trade, according to the United NationsFood and Agriculture Organization.

Rare Feat

The company has 34,000-plus employees in more than 55 countries and posted $74.3 billion in 2010 revenue. Louis Dreyfus is the biggest fund manager in agriculture futures; the No. 2 wheat, corn and sugar trader; the third-largest coffee seller and juice processor; and a major farmer and biofuel processor, the company says.

Like U.S. rival Cargill, Louis Dreyfus has accomplished a rare feat in remaining private. And similar to that company’s founding Cargill family, relations in the Louis-Dreyfus clan are strained. Matriarch Margaret Cargill’s philanthropic wishes and the demands of family shareholders forced that company to shed its 64 percent stake in fertilizer company Mosaic Co. (MOS) last year. (See “Keeping Cargill in the Family,” September 2011.)

Margarita says that when Robert was alive, the couple regularly lunched with the Louis-Dreyfuses. Now, she doesn’t see most of them except at company meetings.

‘Business Relationship’

“I proposed that we continue, but they didn’t want to,” she says. “It’s more like a business relationship now.”

The family may resent Margarita because she’s not a blood relative, Chalmin says.

“There’s not a culture in the world where the in-laws take over a company with the founders’ name on the building where they will be happy,” says Randel Carlock, co-author of “When Family Businesses Are Best” (Palgrave Macmillan, 2010).

Even so, Margarita will soon have to contend with the four family members who control the 39 percent of Louis Dreyfus the Akira foundation doesn’t hold. In 2007, Robert granted options to his two older sisters and two of his cousins. The options allow these remaining family members with company stakes to sell their shares to Akira or back to Louis Dreyfus beginning this year.

Mehdi El Glaoui, a former pharmaceutical executive and confidant of Robert’s whom Margarita named to Akira’s board, values the company at about $7 billion. That puts the 39 percent stake at about $2.75 billion.

If the four sell, Robert’s direct family and descendants would become the only surviving holders, cementing his plan. The cousins, Philippe Louis-Dreyfus and Laure Sudreau-Rippe, declined to comment. Robert’s sisters, Monique Roosmale Nepveu and Marie-Jeanne Meyer, didn’t respond to multiple phone calls.

‘Enough Cash’

Margarita, wearing a gray dress with knee-high black boots in the bar of Paris’s Hotel Fouquet’s Barriere in November, says a year earlier she’d worried about having the money to buy out the family -- but no longer. Louis Dreyfus has shed some U.S. energy assets and its real-estate unit. It also sold its French energy business to Veyrat when he left.

“We have enough cash,” she says. “Banks are also offering us a lot of help.” She declined to elaborate.

Trading is bolstering earnings. The commodities unit generated 62 percent of the holding company’s 2010 revenue and about 80 percent of its $892 million profit, says Serge Schoen, CEO of Louis Dreyfus Commodities BV. A fourfold jump in shareholders’ equity to $5.3 billion from 2006 through 2010 has helped expand trading and let the company invest in ports and processing plants.

Relying on Schoen

Louis Dreyfus has kept value-at-risk, or the largest amount the company expects it could lose in a day, to less than 1 percent of equity, Schoen says. Employees own 20 percent of the unit, he says.

Margarita says she relies on Schoen to run things on a day- to-day basis. The Frenchman joined Louis Dreyfus’s telecommunications division in 1999 from Boston Consulting Group Inc. after getting an MBA from Massachusetts Institute of Technology in 1996.

The commodities business has been on a tear since Robert promoted him to unit CEO from chief financial officer of the division in 2005. Revenue at the unit almost tripled to $46 billion, and net income, including minority shareholdings, increased 2.6 times to $1.05 billion in the five years through 2010. Revenue at the unit jumped to $60 billion in 2011, the company estimates.

‘A Quiet Period’

Schoen, 44, has bigger plans. He wants to double commodities revenue during the next five years and boost earnings 10 percent to 15 percent annually, even as the first half of 2012 looks tougher than a year earlier.

Schoen estimates that profit at the unit fell 20 percent to 30 percent last year from 2010’s record, mostly reduced by a year-end slump in Brazil’s real. The weaker real caused a loss when the ethanol unit’s dollar-denominated debt was revalued in the local currency, he says.

In China this year, buyers are ordering just two to three months of grains and other commodities, rather than the usual six months. That’s cutting into fees from storage and insurance.

“We’re still making good money, but it’s a quiet period,” Schoen says.

Louis Dreyfus is also fending off smaller competitors such as Olam, which is among the top suppliers of rice, cocoa and coffee. And Louis Dreyfus continues to joust with ADM, Bunge and Cargill to supply a global population the UN predicts will surge to 9.3 billion in 2050 from 7 billion last year.

Male Obsession

Paul Willows, a director at Starcom Resources Pte in Singapore and a former Louis Dreyfus trader, says Robert had wanted his commodities businesses to be in the global top three. El Glaoui says the company is on track.

“In the future, there will be three main actors in the field, and we are convinced we have our place in the top three,” he says.

Margarita dismisses ranking size as a male obsession that doesn’t interest her much. She says Louis Dreyfus is already among the biggest in the world.

“Men, they always count who is first, who is second,” she says. “For me as a woman, I don’t see it as being so important. The most important is who will be here in 100 years.”

What’s most surprising is that Margarita has adopted the mission of leading Louis Dreyfus so fully, Chalmin says. In January 2011, she dined with Glencore International Plc CEO Ivan Glasenberg at Blaue Ente, a restaurant in Zurich.

‘Enjoying Our Privacy’

“It was a learning process,” she says. “He explained many possibilities, what could be between our companies, and I knew he was preparing a big transition in going public.”

Glasenberg declined to comment. Glencore sold $10 billion in shares in a May 2011 IPO after 37 years in private hands.

Margarita says Louis Dreyfus doesn’t currently plan to list shares.

“We are enjoying our privacy,” she says.

And she is grooming the next generation. She enrolled twins Kyril and Maurice, now 14, in boarding school in Singapore for a year to expose them to new ways of thinking. The couple’s oldest son, Eric, 19, has an internship at Glencore. She says Asia, which represented 31 percent of Louis Dreyfus commodities sales in 2010, is a priority. She also wants to boost crop production in Kazakhstan, Russia and Ukraine.

Leopold Dreyfus began importing grain from Russia and the Danube River basin in 1864, a decade after the company’s birth. It formed its own bank in 1905 and opened its first U.S. office in 1909.

The Nazi-controlled French administration took over most assets in that country during World War II because the family was Jewish, according to dossiers in the French national archives. The remaining French assets were returned beginning in 1944.

Harvard Business School

Robert, who had spent a brief stint at Louis Dreyfus, rejoined after Harvard Business School in 1973 at the request of his father, Jean, who owned about half of the company. Robert focused on Brazil, turning around a factory for plant-derived edible oil, according to “Robert Louis-Dreyfus: The Incredible Odyssey of a Business Rebel” by Jean-Claude Bourbon and Jacques-Olivier Martin (Michel Lafon, 2009).

Seeing bigger opportunities, he wrote note after note recommending investments in orange juice, soybeans and sugar. They were ignored, according to the book. By the early 1980s, concerned he’d never be more than a junior member, he left and became CEO of U.S. pharmaceutical consulting company International Medical Services.

Nutcracker Ballet

While Robert was starting his career outside the family enterprise, his wife-to-be was a student. Born in the 1960s in what was then Leningrad, Margarita, nee Bogdanova, says her parents died in a train accident when she was 7. She was raised mainly by her grandfather Leonid Bogdanov. He died in 1985 when she was at university and spending time in Moscow. As a great consumer of Muscovite night life, she attended every ballet or opera she could with friend Ludmilla Ramage.

“She had a huge amount of energy and attracted a lot of people,” Ramage recalls. Tchaikovsky’s ballet The Nutcracker and Verdi’s opera Rigoletto were favorites.

Margarita married a Swiss exchange student, moved to Zurich in the late 1980s and worked in phone sales at circuit-board- equipment seller Laytron AG. The couple divorced after a year.

In 1988, while flying to London, Margarita was unaware of the time difference with Switzerland and turned to the man next to her to check. After Robert pulled out a photo of his bobtail sheepdog, she was hooked. Later, Robert, who, like Margarita, was divorced, childless and living in Zurich, called to ask her to translate a document into Russian.

Lunch Date

“I said to him, ‘You know, you could ask me out to lunch without any translation,’ and he said, ‘Oh, yes, yes,’” she recalls.

The two married four years later, in the middle of Robert’s highflying career. He’d become CEO of U.K. advertising agency Saatchi & Saatchi Ltd. in 1990, turning the company around amid a cash crisis. He moved to German sports-wear maker Adidas AG, also as CEO, quadrupling revenue to 5.84 billion euros ($7.5 billion) from 1993 through 2000. Battling leukemia, Robert announced in 2000 that he’d leave Adidas in 2001.

After two decades outside the fold, his family asked him to rejoin as chairman of Louis Dreyfus’s telecommunications unit. He became CEO of the entire company in 2006. He increased his stake to 61 percent by buying out cousins including former CEO Gerard Louis-Dreyfus, father of Julia, the American actress who starred in “Seinfeld.” He also sold the shipping unit, based in a Paris suburb, to cousin Philippe.

After leukemia complications suddenly worsened in mid-2007, Robert picked Veyrat to take over as CEO in early 2008; Veyrat became chairman later that year, Schoen says.

Margarita’s Role

Margarita spent her remaining months with Robert soaking up the company. Doctors recall the couple discussing business while she studied leukemia and the John Cunningham virus, which affects people with compromised immune systems and would cause his death.

“Robert involved his wife a lot,” says Gerard Tobelem, a decade-long friend and president of the French blood-transfusion service. “When he created this foundation, he told me it was so even if he disappeared, all he’d built in his life in business wouldn’t dissipate and would stay as he devised.”

Margarita showcased her mastery of new subjects and willingness to stick to her beliefs with Robert’s illness, friends say. At the Hospital of the University of Pennsylvania in Philadelphia, a doctor ordered Margarita to give Robert a drug, Tom Russell, who was best man at their wedding, says in an e-mail. Not getting a reason, she refused. The doctor exploded, telling her the medical consequences would be severe. She still declined. The doctor later apologized, Russell says. The drug was meant for another patient.

Robert's Wishes

“Her efforts from early on in the onset of the disease increased his life span by at least a year,” he says.

Now, as Margarita carries out Robert’s wish to preserve Louis Dreyfus for their descendants, she faces the challenge of remaining true to his vision.

“Margarita has an enormous loyalty to her husband and what he did,” writer Bourbon says. “What’s complicated is, she seems to always be saying in her head, ‘I have to do what he would have done.’”

Margarita ultimately may have to wrestle with a greater obstacle: proving that a woman steeped more in Tchaikovsky than trading can steer a global commodities power. Thinking back on her trip to Brazil and her fight for control, she says those events helped her understand the scope and potential of the company -- and perhaps her own.

“It’s been like jumping straight in the water,” she says. “The good side of this has been forcing me to learn to swim.”

To contact the reporter on this story: Alan Katz in Paris at akatz5@bloomberg.net.

To contact the editor responsible for this story: Melissa Pozsgay at mpozsgay@bloomberg.net.

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