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on May 12, 2016

JBS plans corporate reorganization

Top global meat and poultry company has announced plans to split its international business from its interests in its home country, Brazil

JBS S.A. has announced plans to reorganize its global business with the aim to “strengthen its position as a leading Brazilian company in the global food industry,” according to a company statement.

The reorganization involves the formation of a new entity, JBS Foods International, which will be listed on the New York Stock Exchange and on BM&FBovespa, through a Brazilian Depositary Receipts program (BDR). All of the company’s businesses outside Brazil and Seara Alimentos Ltda. will be transferred to JBS Foods International.

JBS’s Brazilian companies will be renamed JBS Brasil after the reorganization and remain a publicly listed company on the BM&FBovespa. JBS Brasil will continue to hold JBS's Brazilian beef, biodiesel, collagen and carrier businesses, as well as other activities and its global leather business. The Seara operation and JBS Brasil, with their 125,000 employees in Brazil, will remain under the leadership of existing management and will continue their growth strategies in the Brazilian market.

“The proposed reorganization is a natural step in the continuing development of JBS as a leading Brazilian company in the global food industry,” said Wesley Batista, CEO of the global business. “We have carefully considered various strategic alternatives to enhance the value of our company and we believe that the proposed reorganization offers the greatest potential to deliver long-term value to our stakeholders.”

JBS submitted its plan in advance to the Brazilian Takeover Panel (CAF), which has agreed that the reorganization complies with governance standards. Approval will now be sought from regulatory authorities, New York Stock Exchange (NYSE), shareholders and other parties.

Proposed management structure

The JBS Group will continue to be controlled by its existing Brazilian shareholders with its major shareholder J&F Investimentos, maintaining its central office and strategic decisions in São Paulo.

The existing management team will be maintained in its present form with Batista as the CEO of the global business, Enéas Pestana as the CEO of JBS South America, André Nogueira as the CEO of JBS USA, Gilberto Tomazoni as the global president of operations, Tarek Farahat as the global president of marketing and innovation and Vincent Trius as the global president of new projects.

Among the advantages seen by the company for the reorganization are better reflection of its global presence and the diverse international operations; improved access to the international equity and debt capital markets; a higher profile among the global institutional investor community; enabling Brazilian shareholders to participate in the global growth and expected valuation improvement; and maximizing the value of JBS S.A. and JBS Foods International to the benefit of all shareholders and stakeholders.

JBS Foods International expects to locate its headquarters in the Republic of Ireland, a company spokesman told the Wall Street Journal.

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