Since Brazil’s JBS in 2007 acquired assets of Swift & Company in North America, there’s been anticipation that it would eventually tap equity markets in the United States. Some expected it to spin off North America and maybe other units into a new public company separate from the Brazilian mother ship.
But JBS has opted to take a different route by seeking dual listings on the São Paulo and New York Stock Exchanges. And that dual listing proposal has stirred up some non-financial political opposition in the United States.
As announced in July, JBS is taking the dual listing approach “to reflect the company’s global presence better and unlock value for shareholders.” The company said there will be a dividend distribution “linked to the dual listing will be part of the transaction, given the strategic relevance of the proposal.”
JBS is a diversified, global food production company with operations and commercial offices in 24 countries and more than 330,000 customers in more than 190 countries.
It was established in Brazil 70 years ago, and nearly 60 percent of its global workforce resides in Brazil, producing food and related products in more than 130 production facilities spread across all regions of the country. The company also has significant operations in North America, Europe, the United Kingdom, Australia and New Zealand.
Various U.S. and UK political groups are attempting to rally investment funds and financial regulators against the JBS dual listing on climate and human rights grounds, including re-surfacing the past scandals involving the Batista family, which founded the company.
The political groups have petitioned the Securities and Exchange Commission (SEC) to stop the JBS dual listing plan over their concerns. They claim dual listing will give the Batista family 85 percent of their voting rights, up from 48.6 percent.
As the world’s biggest meat company, JBS has enjoyed financial backing from Bank of America, BlackRock, Citibank, and Barclays.
In 2017, J&F Investments, which invests for the family in JBS, was fined $3.2 billion. By Brazil for offenses including bribery of food safety personnel.
The dual listing means the company will be subject to regulations set forth by the SEC, the New York Stock Exchange (NYSE), and the Brazilian Securities Commission (CVM).
“This proposal will enhance transparency and strengthen corporate governance, attracting a broader base of investors with greater financial capacity,” said Guilherme Cavalcanti, JBS Global CFO. “Importantly, the proposal will provide flexibility to finance growth through the issuance of equity while reducing the cost of capital, allowing the company to compete on an equal footing with global peers.”
JBS USA Holdings, Inc. is a wholly-owned subsidiary of the Brazilian multinational JBS S.A. The subsidiary was created when JBS entered the U.S. market in 2007 by purchasing Swift & Company. JBS USA is based in Greeley, CO. Its competitors include Cargill, Smithfield Foods, and Tyson Foods.
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