The Federal Court of the 1st Region in Brasilia overturned a June decision by a federal judge blocking the sale. “The referred decision authorizes JBS to continue the normal course of its business activities, to buy and also sell assets, specifically the totality of shares from its beef subsidiaries in Argentina, Paraguay and Uruguay to the Minerva Group,” as announced through a material fact on June 6, 2017, the company said in a statement.
JBS previously had agreed to a deal to sell its beef operations in Argentina, Paraguay and Uruguay to Pul Argentina SA, Frigomerc SA and Pulsa SA, respectively, for a total of $300 million. The companies are controlled by Minerva SA. But federal prosecutors in Brazil argued that the sale could jeopardize an investigation into bribes that former JBS Chairman Joesley Batista allegedly paid to regulators and more than 1,000 politicians. Additionally, JBS is under scrutiny for loans made to the company by the National Economic and Social Development Bank (BNDES) through its subsidiary BNDESPAR.
In May, seven executives of JBS, including Wesley and Joesley Batista, reached a plea agreement with federal prosecutors in exchange for their cooperation into the bribery and corruption investigation that has ensnared Brazilian President Michel Temer and two former presidents, among others. As part of the agreement, the Batistas were ordered to pay a fine of R$225 (US$67.93 million), which led the Batistas to sell off assets and use the proceeds to pay the fine and other debts.
The board of directors at JBS also is considering a divestment program of non-core assets expected to generate R$6 billion ($1.8 billion) in cash. Assets involved in the divestment program include JBS’s stake in Vigor Alimentos SA; its shareholding interest at Moy Park and assets associated with Five Rivers Cattle Feeding.