Brazil-based JBS has announced plans to list the global animal protein company on the New York Stock Exchange.
Under the proposal announced to shareholders overnight, JBS would undertake a dual listing structure, with its shares being traded on both the Brazilian and US stock markets.
The intended purpose is to enlarge JBS’s investment capacity for expansion and increase the access of institutional and retail investors to shares representing JBS’s consolidated operations, shareholders were told.
The move has been widely anticipated, and indeed the prospect is frequently raised by analysts during quarterly investor briefings with JBS executives held over the past few years.
The company originally announced plans to prepare for a US listing six or seven years ago, but dramatic events during the Brazilian “Weak Flesh” episode involving bribery of Brazilian meat inspectors and politicians, and jailing of members of the Batista family – founders of the JBS business and 48.8pc shareholders – over corruption, saw the plans shelved. The plan was again cancelled in 2019 during the uncertainty surrounding the COVID era.
As outlined to shareholders, the main purposes of the dual listing strategy are to:
- Adapt JBS’s corporate structure to the global and diversified profile of the company’s operations
- Potential unlocking of the value of the company’s shares; and
- Expand investment capacity to strengthen the conditions for growth and competition with global competitors.
The dual listing would make it possible for JBS Group to:
- Further strengthen the corporate governance;
- Increase its visibility among the global investor community, thereby increasing the comparability with its main peers
- Broaden the access to a wider base of investors
- Increase the flexibility to use equity as source of funding, paving the way to fundraising through issuing shares and, consequently, reduce the need to incur in debt to support growth; and
- Reduce cost of capital.
“When completed, the transaction will not alter in any respect the current operational and management structure of JBS SA, in such way that operating assets, employees, financial flows and logistic chains will remain where and how they operate currently,” shareholders were told.
The flow chart below shows the company structures before and after the proposed dual listing.
Shares in the company on the Brazil SX rose 8pc on the news of the proposed dual listing.
Shareholders will vote on the proposal at an extraordinary general meeting, dates for which are yet to be announced.
The company said it hopes to complete the dual listing by December this year.
JBS was the first Brazilian meat packer to go public, back in 2007. That year saw the company go on a US and Australian processor acquisition spree, buying the former Australian Meat Holdings business from Swift. In the years prior, it had expanded capacity in Brazil and bought plants in Argentina, marking the start of an aggressive global expansion.