Global energy and commodities trader Hartree Partners is in negotiations to buy French agro-industrial company Touton, which deals in almost 10% of the world’s cocoa.
The global cocoa trade is undergoing significant upheaval as issues in West Africa, the world’s top growing region, drive prices to all-time highs, placing pressure on independent companies like Touton, which has a 150-year history.
Touton executives spoke face-to-face with Hartree founding partner Stephen Hendel and the company’s head of investments, Scott Levy, approximately a month ago about an acquisition deal.
Another source, who chose not to be named because of the sensitivity of the subject, confirmed that discussions regarding a potential Hartree acquisition of Touton had taken place but did not elaborate.
Hartree told reporters it does not comment on what it called “market rumors.”
Touton did not reply to a request for comment.
Last year, Hartree entered the soft commodities space with the acquisition of UK-based ED&F Man Commodities, a centuries-old player in the sugar and coffee industry.
Hartree’s foray into soft commodities would be solidified by the purchase of Touton, a company that deals in coffee in addition to cocoa.
Deeper pockets are preferred in the West African crisis.
Global cocoa prices more than doubled last year as a result of bad harvests in the main cocoa growers, Ghana and Ivory Coast, due to unfavorable weather and illness.
For a while, the chocolate ingredient cost was more than most industrial metals, reaching a record high of over $12,000 per metric ton.
After hedge funds left the cocoa market last year, trading in cocoa futures on the ICE exchange is still mostly illiquid and volatile, and prices are still at historically high levels.
The exchange is now demanding traders of its cocoa futures, which serve as a standard for setting the price of actual beans globally, to pledge substantial sums of money as security against possible trading losses.
However, banks are becoming less willing to lend to cocoa dealers after some of them lost over $1 billion on their futures contracts last year.
“Banks now understand that cocoa and coffee are volatile,” stated the head of trading for cocoa at a multinational agri-commodities trade firm.
According to its most recent annual reports, Touton reported a net profit of 130 million euros ($151.53 million) in the year ending March 2024, up from 17 million euros the previous year.
Touton had an exceptionally successful year, according to the chairman of the global cocoa trading, but banks still prefer to lend to businesses with larger budgets when it comes to cocoa because they see it as an anomaly.
The investment firm Oaktree Capital Management and its founding partners, Guy Merison and Hendel Semlitz, who were both formerly co-heads of energy trading at Goldman Sachs, control Hartree.
According to its website, as of June 30, Oaktree managed assets worth $209 billion.
Patrick de Boussac, the CEO of Touton, is getting close to retirement age and wants to cash out, according to four cocoa dealers, including the second person with firsthand knowledge of the discussions.
“Hartree wishes to purchase. Touton wishes to sell. A second cocoa trading head at an agri-commodities trade company stated, “The deal will happen if the price is right.”
