In This Article:
(Bloomberg) -- Shares of Brazil’s JBS SA jumped the most in five years as the company moves closer to a long-awaited share listing in New York after a deal with its second-biggest shareholder.
Most Read from Bloomberg
-
ICE Eyes Massive California Tent Facility Amid Space Constraints
-
Washington, DC, Region Braces for ‘Devastating’ Cuts from Congress
The equity holding arm of Brazil’s state-owned lender BNDES, which owns almost 21% of JBS, will refrain from voting on the plan at the company’s upcoming board meeting, removing the biggest hurdle for JBS’s listing, according to a regulatory filing. The deal was reached with J&F Investimentos SA, which controls the world’s largest meat producer.
The unusual agreement calls for BNDESPar to receive as much as 500 million Brazilian reais ($87.9 million) should JBS’s US listing not bring the share appreciation expected, according to the filing. The companies didn’t disclose what that strike price is but said it must be achieved in the second half of 2026.
“It removes a clear potential overhang for the US listing,” Morgan Stanley analysts including Ricardo L. Alves said in a report. The news is an “important sign of commitment by the controllers, and perhaps one could also infer that the process is moving forward,” the bank said.
JBS shares jumped as much as 15% on the Sao Paulo exchange early Tuesday, for the biggest intraday gain since March 2020.
JBS has argued its valuation is currently capped compared to its peers Tyson Foods Inc., Hormel Foods Corp. and its US subsidiary Pilgrim’s Pride Corp. because the company isn’t listed in the US and can’t be part of indexes such as the Russell 2000 Index and the S&P 500. The company previously said a New York Stock Exchange listing could boost its market value to $30 billion, up from about $14 billion now.
JBS, controlled by Brazilian billionaire brothers Joesley and Wesley Batista, is valued at 4.3 times its 2024 earnings before interest, taxes, depreciation and amortization. That is expected to rise to 4.5 for 2025. Still, that’s below the 6.2 multiple for 2025 of its US subsidiary, Pilgrim’s Pride, and Tyson’s multiple of about 8.5 for the same year.
Morgan Stanley said the bank has “positive views around a potential re-rating of JBS’s valuation multiples” if the company lists in the US. The bank added that the agreement between BNDES and J&F “underscores the conviction of the controlling group on that thesis as well.”