JBS Overcomes Backlash to Secure NYSE Debut
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JBS SA cleared the way for a long-awaited listing of its shares in New York, overcoming fierce opposition from environmental groups and concentrating more power in the hands of the billionaire Batista brothers.
The Brazilian company’s reorganization plan that has been years in the making received the votes it needed from minority shareholders at a meeting in Sao Paulo, . The approval removes the last major hurdle for a planned U.S. listing that proved highly divisive.
JBS has touted the plan as key to accessing a broader pool of investors and building confidence in its corporate governance standards, potentially slashing its capital costs and boosting stock valuation relative to U.S. competitors. Its shares have more than doubled since the listing plan was announced almost two years ago.
But the proposal was fiercely opposed by environmental groups and advocacy investors over concerns related to past bribery scandals involving the Batista brothers and the company’s role in deforestation of the Amazon. The debate drew the attention of politicians from both sides of the aisle in Washington.
Proxy firms Institutional Shareholder Services Inc. and Glass Lewis & Co. advised against the transaction, citing concerns that the new share structure will reduce minority shareholders’ voting power.
(Bloomberg)
The plan creates a dual-class share structure that will give the Batista brothers — Wesley and Joesley — almost 85% of the company voting shares, according to a filing. That’s up from about 48% previously.
“JBS shareholders should hang their heads in shame for voting through this New York Stock Exchange listing and handing the scandal-hit Batista brothers near complete control of the company,” Mighty Earth, a Washington-based nonprofit organization that focuses on environmental issues and human rights, wrote in a letter to the NYSE.
JBS ranks No. 68 on the Transport Topics Top 100 list of the largest private carriers in North America.
A partial vote count released on May 22 showed that a majority of investors were voting against the plan, raising the prospect of a tighter victory than previously expected. In the end, investors chose to focus on the stock’s upside potential rather than on governance concerns, Igor Guedes, an analyst at brokerage firm Genial Investimentos, said in an interview.
The latest in the JBS saga offers an example of how controversial the issue has become. Sen. Elizabeth Warren said in a letter this week that the Securities and Exchange Commission’s approval of the listing plan — coming months after its US subsidiary Pilgrim’s Pride Corp. donated $5 million to President Donald Trump’s inauguration committee — “raises questions regarding undue influence.
RELATED:JBS Vote Spurs SEC Probe Request From Rand Paul
Meanwhile, Kentucky Senator Rand Paul and Mason Capital Management LLC, a JBS shareholder, urged the top U.S. securities regulator to probe ISS and Glass Lewis for advising their clients to vote against the meat supplier’s proposal.
Shares of JBS rose as much as 3.1% in Sao Paulo before erasing gains.
JBS’s plan will transfer ownership of the Brazilian company to a newly formed Netherlands-based entity, which will trade on the NYSE. The company is expected to start trading in New York on June 12, according to its filing.
With operations spanning six continents, JBS produces everything from chicken and beef in the U.S. to plant-based foods in Europe and salmon in Australia, with sales projected at almost $84 billion this year.
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