Brazil's JBS defends dual listing proposal following criticism, shares fall

Reuters

14-05-2025

SAO PAULO, May 14 (Reuters) - Brazilian meatpacker JBS SA (JBSS3.SA), opens new tab defended the structure of a proposed dual listing that will go to shareholders for approval this month, saying on Wednesday that the plan is an attractive value proposition to investors in the long term.
If approved by minority shareholders on May 23, the plan - originally announced in 2023 - would see the world's biggest meat company primarily listed in New York with Brazilian depositary receipts traded in Sao Paulo.
The Institutional Shareholder Services (ISS), an advisory firm for matters of corporate governance, has argued the proposal could potentially weaken minority shareholders' rights.
In a call with analysts to discuss first-quarter results, JBS' Chief Financial Officer Guilherme Cavalcanti addressed that criticism, saying the proposed structure ensures the company will retain a strong controlling shareholder that fully understands the sector.
"In our industry, it is very important that you have defined control," he said. "And control defined by people who understand the business, who have a track record ... This is the best format."
JBS posted strong quarterly results on Tuesday in a seasonally weaker quarter of the year.
However, executives acknowledged on Wednesday that 2025 would be "more challenging" than 2024, citing a tight U.S. cattle cycle and uncertainty related to global tariffs, which could hurt its meat exports out of the United States to China.
JBS shares fell nearly 6%, following the call with analysts.
JBS' current controlling shareholder is the Batista family's J&F investment group.
In a letter sent to shareholders obtained by Reuters, JBS criticized ISS's position on the dual listing.
"ISS clearly fails to recognize the long-term commitment and strategic importance of the controlling shareholder's role and contribution in achieving JBS' leadership in the global food industry," it wrote.
JBS NV, the Dutch company created for the dual listing, will issue Class A and Class B shares. Under the proposed structure, the Class B shares will have 10 times the voting power of Class A shares, and only Class A shares will be publicly traded.
In one potential scenario, JBS' controlling shareholders could end up with 85% of voting power.
Goldman Sachs wrote this week that JBS competitor Tyson Foods (TSN.N), opens new tab also offers different share classes and said that rivals including Marfrig (MRFG3.SA), opens new tab, BRF (BRFS3.SA), opens new tab and Minerva (BEEF3.SA), opens new tab "have a clear controlling shareholder."
All shareholders will be able to convert Class A into Class B shares, Cavalcanti told the analysts.
In private talks with investors, Cavalcanti said JBS managers have been urging all the company's shareholders to back the dual listing proposal, but he added that he could not predict the vote's outcome.
JBS recently received a green-light from the U.S. Securities and Exchange Commission to go ahead with the plan, meaning its shares could start trading in New York next month.
Should the plan be rejected by the minority shareholders, however, it would need to file for a new SEC approval, a process that would take three to six months to complete, Cavalcanti said.