Brazil’s JBS reboots plans to list in New York, shares jump 8%

11:10 am Wednesday, July 12th, 2023

By Ana Mano and Roberto Samora

SAO PAULO (Reuters) -JBS SA, the world’s largest meat packer, on Wednesday proposed listing its shares in New York, hoping the move will bring its multiples closer to peers and that a broader investor base will give it more access to cheaper capital, sending its shares up 8% in mid-morning trade.

JBS in a securities filing offered a one-time dividend payment of about 2.2 billion reais ($454 million) to coax investors into backing the longstanding plan.

Shareholders will decide whether to accept the proposal at a general meeting yet to be scheduled.

JBS Global CEO Gilberto Tomazoni said it is possible that the meeting will take place in 30 days. He believes that by December all steps to complete the transaction will have been taken so that the company’s shares can start trading in New York.

The proposed structure will use a Netherlands-based vehicle called JBS NV and have Class A shares with one voting right and Class B shares with 10 votes, JBS said. JBS NV’s class A common shares would trade in the United States and Brazilian depositary receipts would be listed for trading in Sao Paulo.

JBS’ management has repeatedly made the case that a U.S. listing would reduce its cost of capital and help its shares trade at multiples closer to peers such as Tyson Foods and Pilgrim’s Pride, which it controls.

Analysts at Bradesco BBI agreed that the much-awaited move will help close the valuation gap to its main peer in the United States, referring to Tyson.

Sao Paulo broker Genial said JBS is a “buy” as a proposed listing in the United States will help improve its governance standards.

“A dual listing would better align JBS’ corporate structure it to global peers, which we believe could be received positively by investors,” Goldman Sachs said.

JBS in 2007 was the first Brazilian meat packer to go public. That year saw JBS embark on a U.S. acquisition spree. In years prior, it had expanded capacity in Brazil and bought plants in Argentina, marking the start of its aggressive internationalization.

The U.S. listing has been in the works for the better part of a decade, but was postponed in part due to a 2017 corporate corruption scandal in Brazil and then again amid the COVID-19 pandemic.

JBS gets the lion’s share of its revenue from the U.S. market, where it processes beef, poultry and pork products for domestic consumption and export.

(Reporting by Ana Mano and Roberto Samora; Editing by Jason Neely, Sharon Singleton, Louise Heavens and Mark Porter)