JBS SA cancels reorganization plan after shareholder veto

Company to look at alternatives for creating shareholder value.

JBS SA, the world’s largest beef processor, announced Oct. 26 that it has canceled its plan for a proposed reorganization to spin off its international businesses into a new company called JBS International after Brazil’s national bank, Banco Nacional de Desenvolvimento Econômico e Social (BNDES), vetoed the company’s plan. Wesley Batista, JBS SA chief executive officer, said the bank expressed that the reorganization was not the best way for the company to go forward or to create shareholder value.

BNDES holds a 20.36% stake in JBS SA via its equity arm BNDESPar and exercised its veto power through the shareholder agreement. Batista said the shareholder agreement with BNDES expires in 2019.

The new company would have been headquartered in Ireland and listed on the New York Stock Exchange and BM&F Bovespa.

“While we are disappointed with this outcome, we’re looking forward,” Batista said. “We strongly believe we have a unique platform. We have a very strong business across each region that we operate. We have a unique position to compete globally.”

JBS SA is going to continue looking and working at options and alternatives to determine the best way to move forward, Batista said. In the meantime, he said he is very confident the company will continue creating value and delivering strong results.

Batista said several discussions held with BNDES looked at alternatives, although he declined to provide specifics.

“We’re going to continue to look at ways to increase stock value,” Russ Colaco, JBS SA chief financial officer, said.

For now, JBS SA just wants to hit pause on speculating where the company could go until there is a firm plan, Colaco said, adding that the company will likely have a new plan over the next year.

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