Exclusive: Hartree is in talks with Touton to buy the big cocoa seller, sources say
The French agro-industrial company Touton, which deals in almost 10% of the world’s cocoa, is being negotiated to be acquired by global energy and commodities trader Hartree Partners, two people with direct knowledge of the situation told Reuters.
Problems in West Africa, the world’s top-growing region, are driving prices to all-time highs, upending the global cocoa trade and placing pressure on independent companies like Touton, which has been in business for more than 150 years.
According to one of the individuals, approximately a month ago, Scott Levy, the head of investments at Hartree, and Stephen Hendel, a founding partner of Hartree, met with Touton executives to negotiate an acquisition agreement.
A second source acknowledged that discussions had been place regarding a potential Hartree acquisition of Touton, but it provided no other information.
Because the subject is sensitive, both sources chose not to be identified.
“Market rumors” are something that Hartree told Reuters it does not comment on. A request for comment was not answered by Touton.
Last year, Hartree made its debut in the soft commodities market by acquiring ED&F Man Commodities, a centuries-old company in the sugar and coffee industries based in the UK.
Hartree would solidify its foray into soft commodities with the purchase of Touton, a company that deals in coffee in addition to cocoa.
SHOCK IN WEST AFRICAN LOVES DEEPER POCKETS
Last year, main cocoa growers Ghana and Ivory Coast experienced poor harvests due to illness and unfavorable weather, which caused cocoa prices to more than double globally. The chocolate ingredient was formerly more costly than the majority of industrial metals, reaching a record high of over $12,000 per metric ton.
Prices are still at historically high levels, and after hedge funds left the cocoa market last year, trading in cocoa futures on the ICE exchange is still mostly illiquid and volatile.
As a safeguard against possible trading losses, the exchange is now forcing traders of its cocoa futures, which serve as a standard for pricing actual beans globally, to pledge substantial sums of money as collateral.
Nonetheless, banks are becoming less willing to lend to cocoa merchants after some of them suffered losses on their futures contracts of over $1 billion last year.
A multinational agri-commodities trade house’s head of cocoa trading stated, “Banks now understand that cocoa and coffee are volatile.”
In the year ending March 2024, Touton reported a net profit of 130 million euros ($151.53 million), up from 17 million euros the previous year, according to its latest annual statistics.
According to the chairman of the worldwide cocoa trading, Touton had an exceptionally successful year, but banks still prefer to lend to businesses with larger budgets when it comes to cocoa because they see it as a one-off.
The owners of Hartree are the investment firm Oaktree Capital Management and its original partners, Guy Merison, who was formerly employed at Goldman Sachs, and Hendel and Stephen Semlitz, who were co-heads of energy trading at the bank.
On its website, Oaktree states that as of June 30, it managed assets worth $209 billion.
According to four cocoa dealers, including the second source who was directly aware of the discussions, Patrick de Boussac, the CEO of Touton, is getting close to retirement age and wants to cash out.
Harry wants to purchase. Touton wants to sell. “The deal will be made if the price is right,” stated a second cocoa trading head at an agri-commodities trade company.
