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It is possible that American meat dining rooms have not heard of JBS, but they are likely to have tried their products. Now, the Brazilian meat processor, the largest in the world, also wants them to show their actions.
JBS supplies much of beef, pork and poultry that ends in American plates, and trust is mutual. More than half of the $ 77.2 billion in revenues obtained last year came from the United States. That exhibition is one of the reasons why the company has long covered a list of shares in the US. Having followed the idea from time to time about a decade, the company finally obtained the green light of the regulators and their shareholders to transfer its list of main actions of Brazil to the United States.
The company believes that the measure will help its shares, which is quoted with a strong discount for the US rivals, obtain a higher assessment and give the company access to cheaper funds.
However, the actions will not be tasty for everyone. The Founding Batista family, through its investment vehicles, is the largest JBS shareholder with a 48 percent participation. The planned issue of Supervotar the actions, disproportionately offered to the Batista family, could leave it with 85 percent of the votes.
The ISS and Glass Lewis Shareholders advice firms recommended to the holders of the current Brazilian JBS actions to vote against the dual list, in vain. The long -standing environmental concerns about the impact of livestock on the Amazon jungle and a bribery scandal that resulted in the United States Stock Exchange and Securities Commission that hit JBS and the Batista brothers with multimillion -dollar sanctions could maintain actions outside the institutional investors menus with ESG mentality.
Even without these oddities, selling meat is a difficult business. High prices of grains and cattle are increasing costs for meat pilots. A hard economy also means that the range to transmit the highest costs for consumers has become more limited. While 2024 revenues in JBS increased by a fifth since 2021, profitability is 50 percent lower.
Despite the increase in the price of the shares following their approval of US lists. On the contrary, Tyson Foods is in a multiple of nine times, while Smithfield Foods and Hormel Foods are in seven and 12 times, respectively, a list of the United States, by virtue of the potential inclusion of the index and lower financing costs, should help reduce this valuation gap.
Even then, compared to US rivals, JBS’s business mixture is more inclined towards the processing of low margin beef instead of the largest margin processed foods. Acquisitions can help. To close the assessment gap completely, the King of Brazil’s beef will have to change much more than his listing market list.
bread.yuk@ft.com
