Vetoed by a Brazilian government agency, plans for a major reorganization of Brazil-based meat company JBS have been brought to a halt, and its shares have tumbled in value, reports Reuters.
In August, shareholders had agreed to the company’s proposed global reorganization, which would have seen its operations outside of Brazil, as well as its Brazil-based subsidiary Seara Alimentos, regrouped under a new entity to be known as JBS Foods International, with its likely headquarters in the Republic of Ireland.
That proposal was subject to approval by regulatory agencies, but the process now appears to have stalled due to its opposition from BNDES Participações SA (BNDESPAR), the investment arm of Brazil’s state development bank, BNDES, which is JBS’s second largest shareholder after the Batista family.
According to BNDESPAR, its opposition stems from its view that the proposed reorganization would not be in the best interests of the company or its shareholders. It would have led to 85 percent of JBS assets for the generation of income to the foreign company, leading to the denationalization of the company and putting it under the jurisdiction of agencies outside Brazil.
Now holding 20.36 percent of the share capital of JBS SA, the bank has been supporting JBS since 2007, when the meat company had few international interests and an annual revenue of about BRL4 billion real (US$1.3 billion). Over the past decade, JBS has become a global leader in the protein industry, with a presence on all continents and annual sales of BRL163 billion (US$51.9 billion).
BNDESPAR confirmed its full support for JBS, and remains open to evaluate alternative plans for its corporate reorganization.
By the close of trading on the day of the announcement, Reuters reported that JBS shares had fallen 18 percent, its greatest one-day slide in eight years.
