Brazilian meat processor JBS has cancelled its plans to move some of its operations outside the country after a government agency BNDESPar vetoed a proposed reorganization.
BNDESPar, Brazil's state development bank BNDES’ investment arm, has opposed JBS’ proposal, giving the company a setback in its ambition to become a global food processing giant with headquarters in Ireland, CNBC reported.
JBS planned to offload some of its Brazilian operations to Ireland which did not materialize.
In May, Reuters had reported that JBS Foods International unit was planning to list in the New York stock exchange. It was welcomed by investors as JBS seemed set to become the first Brazilian multinational company with a distinctive division of its local and global assets.
However, the quashing of the plan resulted in the company’s shares plunging nearly 18% on October 26 to its lowest value in the last eight years.
The government agency said in the statement: “BNDESPar is observing its fiduciary duties, and is acting to protect the interests of the company it invested in.”
BNDESPar is the second largest stakeholder in JBS with nearly a 20% stake after the Batista family which owns 45% stake.
The equity arm claimed that the reorganization would transfer nearly 85% of JBS’ cash generating capability to a foreign entity which would substantially alter the company shareholders’ rights and duties, reported Reuters.
According to the company’s top managers – the Batista brothers- JBS reorganization was expected to be completed by next month had BNDESPar not vetoed it.
Reorganization in the company seemed to be inevitable all along as a significant amount of JBS’ revenue comes from overseas units, in particular from North America.
