December 7, 2016

As part of a wider reorganization, Brazil’s JBS, the largest beef processor in the world, is planning an initial public offering (IPO) in the U.S. for its JBS Foods International BV unit in the first half of 2017.

JBS Food International, a newly formed Netherlands-based subsidiary created by JBS as an umbrella under which to consolidate its international businesses, has not released the price per share as of yet but has stated that it intends to raise $500 million through the float, according to Market Watch.

The unit will be led by Gilberto Tomazoni, formerly head of JBS’s global operations, and will encompass all JBS operations outside of Brazil including all U.S.-based beef and pork plants, UK poultry business, Moy Park, and Seara, a Brazilian chicken and processed food operation. Wesley Batista will assume the role of chairman of the unit and will also remain in his role as CEO overseeing JBS’ Brazilian beef business and its related activities.

Meanwhile, JBS announced that it will retain control of the new unit after the sale and will also continue to manage the control of its Brazilian operations, with the IPO designed to cut the company’s debt while also giving it a new channel through which to access equity and debt markets outside of Brazil.

“This looks to be positive for shareholders,” said João Pedro Brugger, an economist at investment company Leme Investimentos reports The Denver Post. “The main thing is they’ll be able to access resources at a moment when credit is restricted.”

This is the second attempt by JBS to restructure its business. The group’s first attempt earlier this year would have moved its headquarters to Ireland and would have listed JBS Foods International on the New York Stock Exchange (NYSE) – a move that could have made the Irish company the parent company of JBS. These plans were abandoned in October however, after opposition from BNDES Participações, the investment arm of Brazil’s development bank and one of JBS’ major shareholders.

In respect to the latest restructuring plan, which will keep control of JBS in Brazil, BNDES states that it sees the scheme as beneficial in comparison to the first, which it feared would denationalize the company.

“The proposal is in line with company’s growth trajectory,” BNDESPar, the BNDES’s investment arm, said in a statement in response to questions reports Agweb. “BNDESPar reiterates its support to the company and believes in its value creation potential.”

Crying Wolf?

Some industry watchers are holding their cards close in regard to the possibility of this JBS IPO actually materializing. Food Dive reminds readers of the four failed IPO attempts before February 2015 – the last of which was set to raise US$1.2 billion.

Additionally, JBS’ prior rejected reorganization attempt could very well have left its shareholders with a bad taste for the whole plan, who may still create serious pushback before a possible listing in New York.

Cooler heads may prevail however in seeing the benefits of the plan as Brazil struggles through a period of economic downturn, inflation, tight credit, political corruption, the impeachment of former president Dilma Rousseff in August, the loss of its investment-grade rating with creditors, and strict financial reforms enacted by current president, Michel Temer as a means to restore fiscal responsibility.

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Lynda Kiernan