JBS SA is moving ahead with a long-delayed plan to go public in the US.
(Bloomberg) — JBS SA is moving ahead with a long-delayed plan to go public in the US.
The world’s largest meat supplier has filed a registration request to the U.S. Securities and Exchanges Commission and will seek shareholder approval to trade its stock on the New York Stock Exchange through a direct listing, according to a filing. Brazilian depositary receipts backed by JBS shares will be traded on the Sao Paulo stock exchange, where the company is currently listed.
JBS has had its sights on a US listing for more than a decade as the company grew into a global juggernaut through aggressive deal making. However, multiple plans for initial public offerings fell apart, foiled by economic downturns and a massive bribery scandal involving members of the company’s ruling family.
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Chief Executive Officer Gilberto Tomazoni thinks this time will be different, pointing to this plan’s simpler structure than previous attempts.
“We’ve created all the conditions for this one to be approved,” Tomazoni said in an interview. The plan will substantially boost the company’s ability to grow and use equity as funding. “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. The company will continue to be run from its headquarters in Sao Paulo.
“It’s exactly the same JBS as you know today,” Chief Financial Officer Guilherme Cavalcanti said in the interview.
The company will opt for a dual-share stock policy that will give its current controlling shareholders, the Batista family, more voting rights. Owners of ordinary shares will have the option until 2026 to convert them into Class B shares, which get ten votes each, under certain conditions.
The US listing is seen as key to the company 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.
US-based operations, which include publicly traded chicken producer Pilgrim’s Pride Corp., generate almost half of JBS’s revenues. Brazil, where the company was formed 70 years ago, accounts for 12% of sales.
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.
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