JBS IPO 'delayed, but not derailed'
Aug. 16, 2017
by Erica Shaffer
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Executives at the Brazilian meat packer believe NYSE listing is the right strategy.
SÃO PAULO, Brazil – JBS SA, the world’s largest meat packer, intends to forge ahead with plans to launch an initial public offering in 2018 despite legal challenges at home and abroad.
Speaking to analysts during an earnings conference call, executives with the company insisted that accessing a broader base of investors by listing on the New York Stock Exchange will better reflect the global stature that JBS has achieved.
“If you look at JBS today, 80 percent of our businesses are outside of Brazil, and we are a much more international company and very diversified protein player,” CEO Wesley Batista said. “And we believe…being listed in the US under US rules…accessing a broader investor base…is the right direction for the company to reflect who we are today.”
Revamping the company’s corporate governance structure and implementing an asset-wide compliance program are expected to facilitate the JBS’s goals. In June, the company announced the hiring of Marcelo Proença as the company’s head of Global Compliance and enlisted the international law firm of White & Case LLP to assist in the development of a new compliance office within the company.
“So, that for us is a very, very important step,” said JBS Chairman Tarek Farahat. “Management and the board is taking this very, very seriously and we’re making some important advances there.”
He added that the successful negotiation of a stabilization agreement with the company’s banks was another key enabler to the company unlocking shareholder value in the US. The agreement preserves preserve credit lines representing R$20.5 billion of debt, or 93 percent of the principal amount that JBS acquired from financial institutions in Brazil and abroad.
Additional successes for JBS include the divestiture of the company’s interest in the Vigor Alimentos dairy business to Grupo Lala for $250 million; the sale of Lakeside Feeders and the adjacent farmland in Brooks, Alberta, Canada, to MCF Holdings Ltd., for C$50 million; and a court decision clearing the way for the company to sell its South American beef operations to subsidiaries owned by Minerva SA.
“I like to think that sometimes, crisis is an opportunity you don’t want to miss,” Farahat explained. “So not missing the crisis as an opportunity, we have taken the decision to streamline our business, focused on where we can win, play where we can win.
“…And then eventually, by having that business focused on play where we can win, where we have a scale, where we represent, where we are a meaningful player in the market, that would enable us to create shareholder value when we go, hopefully, public soon in the US.”