JBS, SA, the world’s largest producer of animal protein, has canceled a global reorganization plan, which was favored by many of its shareholders, according to a Wall Street Journal report. The reorganization plan previously announced would have seen its operations outside of Brazil, as well as its Brazil-based subsidiary Sear Alimentos, regrouped under a new entity to be known as JBS Foods International. The new company would be headquartered in the Republic of Ireland. JBS Foods International would also have been listed on the New York Stock Exchange.
Despite the fact that shareholders has agreed in August to the proposed reorganization, the plan was recently vetoed by the Brazilian national development bank BNDES. BINDES is JBS’s second largest shareholder after the Batista family.
BNDES holds a 20.36 percent share in the company via its equity arm and has veto power over the plan as part of a shareholder agreement with JBS, the company said. The bank stated it rejected the plan because it “doesn’t best represent the interests” of the company and its shareholders. BNDES said its opposition stems from the fact that the reorganization would have led to 85 percent of JBS assets for the generation of income to the foreign company, which would lead o the denationalization of the company and putting it under the jurisdiction of agencies outside of Brazil.
The meat and poultry giant JBS, whose U.S. holdings include Pilgrim’s Pride and Swift & Company, receives more than 80 percent of its revenue from outside Brazil. The plan to move the new company to Ireland was thought to be a way to unlock value for shareholders by giving it better access to international capital markets.
Brazil’s new present Michel Temer, replaced the head of BNDES in May. JBS Chief Executive Officer Wesley Batista said the company had kept BNDES informed while evaluating the plan and that it was too early to say what other alternatives the company might choose to help boost value for shareholders.
The shareholder agreement with BNDES expires in 2019. After that, “we can go in any direction” without getting approval from BNDES or other shareholders, Bastista said. However, JBS could take new action within about a year to restructure the company. Any new plans would be “measured and considerate of stakeholders,” said JBS’s Chief Financial Officer Russ Colaco, adding that the company will not wait until 2019 to announce a new plan.
