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Brazil’s JBS to spin off international business

May 12, 2016
Food & Drink

Brazil’s JBS SA, the world’s biggest beef processor, said Wednesday it plans to spin off its international businesses into a new company based in Ireland and list it on the New York Stock Exchange in an operation that could make the new company the controller of its parent.

The new unit will be named JBS Foods International, and JBS SA will change its name to JBS Brasil and remain traded in Brazil. JBS hasn’t decided yet where in the Republic of Ireland the new company will be based, and it will be managed out of Brazil until a decision is made, according to a company spokeswoman.

JBS SA shareholders will initially receive one share in the new company for every share they already own in the parent company. JBS SA shareholders will then be offered the chance to trade in their JBS SA shares for more shares of Foods International, and if 50% or more of JBS SA shares are traded in, Foods International will become the controlling company of JBS SA.

The entire operation will have to be approved by JBS SA’s shareholders and by regulators.

JBS SA will only accept up to 75% of its in shares in return for Foods International shares in order to maintain the 25% free-float required to trade on Brazil’s BM&FBovespa exchange. If shareholders owning more than 75% of JBS SA shares choose to accept the trade, Foods International shares will be distributed on a pro rata basis.

JBS SA Chief Executive Officer Wesley Batista will be CEO of the new company, and other top managers will be the same at both companies through the end of the operation. Management positions at Foods International after the operation has been concluded haven’t been determined yet, the spokeswoman said.

JBS Brasil will group together all of JBS SA’s Brazilian operations, and Foods International will consist of the company’s international businesses, including U.S. meat processors Swift & Company and Pilgrim’s Pride , and all of the Seara Alimentos business.

Shares of JBS Foods International will also be traded in Brazil as level II Brazilian Depositary Receipts, or BDRs.

By Jeffrey T. Lewis

Source: Wall Street Journal

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