JBS shelves plans for US stock market float

Beef Central, 27/10/2016


THE world’s largest meat processor, JBS SA, has cancelled plans to reorganise its business by floating most of the company on the New York Stock Exchange and moving management to Ireland.

JBS logoThe dramatic turn of events came after minority shareholder, the Brazilian Government’s National Development Bank (BNDES), vetoed the move.

JBS shares dropped dramatically on the news yesterday.

BNDES, through its equity arm BNDESPar, holds a 20.36 percent stake in JBS and held veto power over the plan.

Under the proposed reorganisation, JBS intended to contribute all of its assets except its Brazilian beef business to a new holding company called New Holdco, according to documents filed with the Securities and Exchange Commission.

New Holdco was to be a wholly-owned subsidiary of JBS International, while JBS SA (South American operations) was designated as a consolidated subsidiary of JBS Foods International and still trading separately on the Brazilian stock exchange.

JBS Foods International was to be publicly traded on the New York Stock Exchange.

According to finance website, JBS SA shares plummeted nearly 23pc on the news yesterday, wiping some US$2.5 billion off the company’s stockmarket value, before recovering somewhat in later trading.

BNDES said in a statement that the bank was against the proposed reorganisation, and was exercising its power of veto to block the move.

“As a result of this, the company is cancelling the steps towards the implementation of the reorganisation,” it said.

The rejection deals a major blow to JBS’s plans to continue its rapid expansion into overseas markets, and will make it harder for the company to access overseas capital, said.

If executed, the effect of the restructure would have been to effectively move JBS out of Brazil. Control of the company’s international operations (minus Brazil) would have gone to a new headquarters in Ireland. Only the company’s domestic Brazilian business would have remained listed on the Brazilian stock exchange.

The move was intended to the lay the groundwork for future expansion, including by improving access to capital, and by reducing the company’s tax burden.

The restructure was announced back in May, and it is reported that executive were confident the plan had the backing of BNDES.

But since then, there has been a change in leadership at development bank.

JBS’s international portfolio makes it the world’s largest meat processing company, with interest in beef, chicken, pork and lamb around the world. The company operates Australia’s largest red meat processor and lotfeeder, JBS Australia, with beef, sheep, goatmeat and pork operations in Queensland, Victoria, New South Wales and Tasmania.


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