Brazil’s JBS to List Shares on NYSE In Bid to Unlock Value

Bloomberg — JBS SA (JBSS3), the world’s largest meat supplier, is moving ahead with a long-delayed plan to list its shares on the New York Stock Exchange.

JBS said Wednesday it filed a registration request to the US Securities and Exchange Commission and will seek shareholder approval for a planned direct listing. Depositary receipts backed by JBS stock will trade on Sao Paulo’s stock exchange, where the company is currently listed.

The Brazilian company, founded and controlled by the Batista family, sees the move as key to accessing a broader pool of institutional investors and building confidence in its corporate governance standards, potentially slashing its capital costs and boosting stock valuation relative to US competitors such as Tyson Foods Inc.

JBS, which has a market value of $7.9 billion, has had its sights on a New York listing for more than a decade as it grew into a global juggernaut through aggressive deal making. The company now has operations stretching from Colorado to New Zealand. It’s the largest producer of beef and chicken, the second-biggest supplier of pork, and the No. 1 ready-meals company in the UK. US-based operations generated almost half of JBS’s $73 billion in revenues last year, with Brazil accounting for 12%.

Previous plans to list in the US fell apart, foiled by economic downturns and a massive bribery scandal involving members of the Batista family. Chief Executive Officer Gilberto Tomazoni says the latest plan has a simpler structure compared with earlier attempts.

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“We’ve created all the conditions for this one to be approved,” he said in an interview. The plan will substantially boost the company’s ability to grow and use equity as funding, he said. “I’m convinced it will unlock tremendous value to the shareholder.”

JBS plans to use a Netherlands-based entity as a vehicle for the listing. The proposed model won’t affect the way JBS operations across the world are organized, nor their financial flows, Chief Financial Officer Guilherme Cavalcanti said. The company will continue to be run from its headquarters in Sao Paulo.

“It’s exactly the same JBS as you know today,” Cavalcanti said in an interview.

Shares of JBS rose as much as 9.9% in Sao Paulo, trimming their year-to-date losses. The stock is down about 16% since the beginning of the year, missing an 8% rally on Brazil’s benchmark Ibovespa equity index in the same period.

The company has proposed a dual-class share structure that will give the Batistas more voting rights than other investors. Investors will have the option until 2026 to convert ordinary shares into Class B stock, which will have 10 votes each, under certain conditions.

JBS was created in the 1950s by Jose Batista Sobrinho, at time when Brazilian president Juscelino Kubitschek implemented his “50 years in five” plan to fast-track construction of the country’s new capital, Brasilia. Batista, who started out butchering five heads of cattle a day, helped supply meat for the city’s construction workers.

By the 2000s, the company had started expanding into the US through the acquisitions of Swift & Co., the beef-producing units of Smithfield Foods Inc., and chicken producer Pilgrim’s Pride Corp. The buying spree was backed by state-development bank BNDES as part of a broader government push for the internationalization of Brazilian companies.

The meat producer will likely face heightened investor scrutiny for its corporate governance as well as its impact on climate change. Deforestation of the Amazon, which has been linked to grazing cattle, is a major contributor to greenhouse gases. JBS has sometimes failed to follow through on its commitment to never buy cattle from deforested areas. It has set 2025 as a deadline to put a new tracking system in place allowing the company to better track its suppliers.

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Over the past few years, JBS has managed to slash its bank borrowings and boost debt maturities at a lower service cost. More recently, the company saw profits plunge amid record-high cattle costs in the US and elevated animal-feed prices at a time when inflation has curbed demand.

--With assistance from Vinícius Andrade.

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